Question Details

Condensed financial statements for Black Company 


Figure 16-4.
Condensed financial statements for Black Company appear below:

Comparative Balance Sheets
	2014	2013
Cash	$   128,000	$   201,000
Accounts receivable	472,000	438,000
Inventories	797,000	673,000
Prepaid expenses	81,000	92,000
Plant and equipment (net)	  2,655,000	  2,428,000
Total assets	$4,133,000	$3,832,000
 		
Accounts payable	$   198,000	$   280,600
Long-term bonds payable	1,000,000	1,000,000
Preferred stock, 10%, $100 par	450,000	450,000
Common stock, no par	1,800,000	1,800,000
Retained earnings	     685,000	     301,400
Total liabilities and stockholders’ equity	$4,133,000	$3,832,000

Income Statement
December 31, 2014
Sales, net	$5,400,000
Less cost of goods sold	  3,240,000
Gross margin	2,160,000
Less operating expenses	  1,010,000
Net operating income	1,150,000
Interest expense	       80,000
Net income before taxes	1,070,000
Less income taxes	     321,000
Net income	$   749,000

There were 72,000 shares of common stock outstanding throughout the 2014. Dividends on common stock amounted to $320,400 and dividends on preferred stock amounted to $45,000. The market value of a share of common stock was $54 at the end of 2014. The income tax rate is 30%.

	1.	Refer to Figure 16-4.

Required: Calculate 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 16-4.

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

	3.	Refer to Figure 16-4.

Required: Calculate 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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