You have just been hired as a loan officer at San Diego State Bank. Your supervisor has given you a file containing a request from Mobile Company, a manufacturer of auto components, for a $1,000,000 five-year loan. Financial statement data on the company for the last two years are given below Comparative Balance Sheet Year Assets Current assets 315,500 Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses 914,000 1,337,500 89,500 401,250 104,000 617,000 737,500 74,500 Total current assets 2,656,500 3,440,800 1,934,250 3,096,400 Plant and equipment, net Total assets Liabilities and Stockholders' Equity $6,097,300$ 5,030,650 Current liabilities Bonds payable $1,258,000754,000 1,090,000 1,290,000 Total liabilities 2,548,000 1,844,000 Stockholders' equity Preferred stock, 8%, $30 par value Common stock, $40 par value Retained eamings 600,000 2,000,000 949,300 600,000 2,000,000 586,650 Total stockholders' equity 3,549,300 3,186,650 $6,097.300S 5,030,650 Total liabilities and stockholders' equity Mobile Company Comparative Income Statement and Reconciliation Sales This Year Last Year 5,430,000 4.250,000 Lite Sciences Ch. 20 (pptxHist-Final Presentation 2.pdf Show All Comparative Income Statement and Reconciliation Sales Cost of goods sold $5,430,000 $ 4,250,000 3,175,000 4,085,000 Gross margin Selling and administrative expenses 1,345,000 535,000 1,075,000 515,000 Net operating income 810,000 130,500 560,000 110,500 Interest expense Net income before taxes Income taxes (30%) Net income Dividends paid: 679,500 203,850 449,500 134,850 475,650 314,650 Preferred stock 48,000 48,000 Common stock Total dividends paid Net income retained 65,000 113,000 362,650 41,000 89,000 225,650 Retained earnings, beginning of year 586,650 361,000 Retained earnings, end of year $ 949,300586,650 Loretta Young, who just two years ago was appointed president of Mobile Company, admits that the company has been "inconsistent" in its performance over the past several years. But Young argues that the company has its costs under control and is now experiencing strong sales growth, as evidenced by the more than 27% increase in sales over the last year. Young also argues that investors have recognized the improving situation at Mobile Company, as shown by the jump in the price of its common stock from $43.00 per share last year to $51.00 per share this year. Young believes that with strong leadership and with the modermized equipment that the $1,000,000 loan willl enable the company to buy, profits will be even stronger in the future Anxious to impress your supervisor, you decide to generate all the information you can about the company You determine that the following ratios are typical of companies in Mobile's industry Current ratio Acid-test ratio 2.3 1 2 Life Sciences Ch. 20 (...pptx Hist-Final Presentation 2.pdf Show AlI X industry ou determine that the tollowing rabos are typical of companios in Mobile's 2.3 1.2 31 days 60 days 9.5 % Current ratio Acid-test ratio Average collection period Average sale period Return on assets 0.65 Times interest eamed Price-earnings ratio 5.7 10 Required: 1. You decide first to assess the rate of return that the company is generating. Compute the following for a. The return on total assets. (Total assets at the beginning of last year were $4,370,000.) (Round your percentage answers to 1 decimal place i.e., 0.123 is considered as 12.3.) This year Lastyear Return on total assets b. The return on common stockholders' equity. (Stockholders' equity at the beginning of last year totaled $4,519,185. There has been no change in preferred or common stock over the last two years.) (Do not round your intermediate calculations. Round your percentage answers to 1 decimal place L.e., 0.123 is considered as 12.3.) This yearLast year Return on common stockholders' equity c. Is the company's financial leverage positive or negative? Life Scences Ch. 201.-pptx . Hist-Final Presentation 2.pdf . n Show All Is the company's financial leverage positive or negative? c. This year Last year You decide next to assess the well-being of the common stockholders. For both this year and last year, compute a. The eamings per share.(Round your answers to 2 decimal places.) This yearLast year Earnings per share b. The dividend yield ratio for common stock. (Round your intermediate calculations tor2 decimal places and and your percentage answers to 1 decimal place i.e., 0.123 is considere fas 12.3.) This year Last year Dividend yield ratio c. The dividend payout ratio for common stock. (Round your intermediate calculations to 2 decimal places and your percentage answers to 1 decimal place i.e. 0.123 is considered as 12.3.) Life Sciences Ch. 20 ( pptx Hist-Final Presentation 2.pdf . Show AlIX c. The dividend payout ratio for common stock. (Round your intermediate calculations to 2 decimal places and your percentage answers to 1 decimal place l.o., 0.123 is considered as 12.3.) Dividend payout ratio d. The price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answers to 1 decimal place.) Last year times times e. The book value per share of common stock. (Round your answors to 2 decimai places.) This year Last year Book value per share f. The gross margin percentage. (Round your percentage answers to 1 decimal place i.e, 0.123 is considered as 12.3.) This yearLast year Gross margihn percentage Life Sciences Ch. 20(-.ppt Hist-Final Presentation 2.pdf tx . Show All 3. You decide, finally, to assess creditor ratios to determine both short-term and long-term debt paying ability. For both this year and last year, compute: a. Working capital This Working capital b. The current ratio. (Round your answers to 2 decimal places.) s year Last year Current ratio c. The acid-test ratio. (Round your answers to 2 decimal places.) This year Last ye Acid-test ratio d. The average collection period. (The accounts receivable at the beginning of last year totaled $520,000.) (Use 365 days in a year. Do not round intermediate calculations. Round your final answers to the nearest whole number.) This year Last year Average collection period days days Life Sciences Ch. 20 (_.pptx Hist-Final Presentation 2.pdf Show All . e. The average sale period. (The inventory at the beginning of last year totaled $650,000.) (Use 365 days In a year. Round your intermediate calculations to 2 declmal and final answons to the nearest whole numbor.) Average sale period days days f. The debt-to-equity ratio. (Round your answers to 2 decimal places.) This year Last Debb-to-equity ratio g. The times interest earned. (Round your answers to 1 decimal place.) This year Last year Times interest earned References eBook & Resources Worksheet Leaning Leaning Objective: 13-06 Compuite Objective: 13-03 and interpret financial ratios thet Compute andanagers use to assess market interpret financial performance ratios that Life Sciences Ch. 20 (.pptx" s Hist-Final Presentation 2.pdt Show All x