Question Details

The market price of a share of common stock 



Figure 16-2.
Financial statements for Grange Company appear below:

Grange Company
Comparative Balance Sheet
December 31, 2014 and 2013
	2014	2013
Current assets:		
	Cash and marketable securities	$   180,000	$   160,000
	Accounts receivable, net	150,000	120,000
	Inventory	100,000	100,000
	Prepaid expenses	       40,000	      50,000
Total current assets	470,000	430,000
Noncurrent assets:		
	Plant & equipment, net	  1,390,000	  1,320,000
Total assets	$1,860,000	$1,750,000
		
Current liabilities:		
	Accounts payable	$   130,000	$   130,000
	Accrued liabilities	60,000	80,000
	Notes payable, short term	     100,000	     100,000
Total current liabilities	290,000	310,000
Noncurrent liabilities:		
	Bonds payable	$     270,000	 $    300,000
Total liabilities	     560,000	     610,000
Stockholders' equity:		
	Preferred stock, $5 par, 5%	100,000	100,000
	Common stock, $5 par	220,000	220,000
	Additional paid-in capital--common stock	190,000	190,000
	Retained earnings	$     790,000	 $    630,000
Total stockholders' equity	  1,300,000	  1,140,000
Total liabilities & stockholders' equity	$1,860,000	$1,750,000

Grange Company
Income Statement
For the Year Ended December 31, 2014
Sales (all on account)	$2,400,000
Cost of goods sold	  1,680,000
Gross margin	720,000
Operating expenses	     280,000
Net operating income	440,000
	
Interest expense	       30,000
Net income before taxes	410,000
Income taxes (30%)	     123,000
Net income	$   287,000

Dividends during 2014 totaled $127,000, of which $5,000 were preferred dividends.

The market price of a share of common stock on December 31, 2014, was $100.

1.	Refer to Figure 16-2.

Required: Compute the following liquidity ratios for 2014:
A.	current ratio
B.	quick ratio
C.	accounts receivable turnover ratio
D.	inventory turnover ratio
E.	inventory turnover in days



2.	Refer to Figure 16-2.

Required: Compute the following leverage ratios for 2014:
A.	times-interest-earned ratio
B.	debt ratio
C.	debt-to-equity ratio


3.	Refer to Figure 16-2.

Required: Compute the following profitability ratios for 2014:
A.	Return on Sales
B.	Return on Total Assets
C.	Return on Common Stockholders' Equity
D.	Earnings per share



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