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The financial statements of ABC Co. appear below:
ABC Co.
Comparative Balance Sheet
December 31, 2014
ASSETS
2014
2013
Cash
$25,000
$40,000
Marketable Securities
20,000
60,000
Accounts Receivable (net)
40,000
30,000
Inventory
150,000
170,000
Property, Plant and Equipment (net)
200,000
Total assets
$405,000
$500,000
Liabilities and Stockholders' equity
Accounts Payable
$30,000
Short Term Notes Payable
90,000
Bonds Payable
75,000
160,000
Common Stock
175,000
145,000
Retained Earnings
Total Liabilities and Stockholders' Equity
Income Statement
For the Year Ended December 31, 2014
Net Sales
$360,000
Cost of Goods Sold
184,000
Gross Profit
176,000
Expenses
Interest Expense
21,000
Selling Expense
Administrative Expense
Total Expenses
71,000
Income before income taxes
105,000
Income tax expense
Net income
$75,000
Additional information:
a. Cash dividends of $50,000 were declared and paid in 2014.
b. Weighted average number of shares of common stock outstanding during 2014 was 62,000 shares
c. Market value of common stock on December 31, 2014 was $15 per share.
d. Net cash provided by operating activities for 2014 was $65,000
Instructions:
Using the financial statements and additional information, compute the following ratios for ABC Co. for 2014. Show all computations.
1. Current ratio
2. Return on common stockholders equity
3. Price earnings ratio
4. Inventory turnover ratio
5. Receivables turnover
6. Times interest earned
7. Profit margin ratio
8. Average days in inventory
9. Payout ratio
Return on assets
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