Problem 14-3A [x] Your answer is incorrect. Try again Condensed balance sheet an
ID: 2401258 • Letter: P
Question
Problem 14-3A [x] Your answer is incorrect. Try again Condensed balance sheet and income statement data for Landwehr Corporation appear belovw. LANDWEHR CORPORATION Balance Sheets December 31 2018 2017 20,000 45,000 95,000 70,000 70,000 $600,000 $80,000 85,000 310,000 125,000 $600,000 2016 18,000 48,000 64,000 45,000 358,000 $533,000 $70,000 50,000 300,000 113,000 $533,000 Cash Accounts receivable (net) Other current assets Investments Plant and equipment (net) $25,000 50,000 90,000 75,000 400,000 $640,000 3 Current liabilities Long-term debt Common stock, $10 par Retained earnings $75,000 80,000 340,000 145,000 $640,000 LANDWEHR CORPORATION Income Statement For the Years Ended December 31 2018 2017 $740,000 $700,000 50,000 Sales revenue Less: Sales returns and allowances 40,000Explanation / Answer
2017
2018
(1) Profit Margin
(30000/650000)
=4.6%
(45000/700000)
=6.4%
(2) Asset Turnover
(650000/566500)
=1.2 times
(700000/620000)
=1.1 times
(3) Earning per share (weighted avg common share in 2018 were 32000 & in 2017 is 31000)
(30000/31000)
=0.97
(45000/32000)
=1.41
(4) Price Earning Ratio
(5/0.97)
=5.2 times
(8/1.41)
=5.7 times
(5) Payout Ratio
(18000/30000)
=60 %
(25000/45000)
=55.6 %
(6) Debt to Asset Ratio
(165000/600000)
=27.5 %
(155000/640000)
=24.2%
(1) Profit Margin = Net Income/Net Sales * 100
(2) Asset Turnover = Net Sales/Avg Total Assets
Avg Total Assets for 2017 = (600000 + 533000)/2 = 566500
Avg Total Assets for 2018 =(640000 + 600000)/2 = 620000
(3) EPS = Net Income/No of Shares
(4) Price Earning Ratio = Market Price per share / Earnings per share
(5) Payout Ratio = Dividend / Net Income
Dividend for 2017 = Retained Earning opening Bal + Net Income – Retained Earning closing Bal
= 113000 + 30000 – 125000 = 18000
Dividend for 2018 = 125000 + 45000 – 145000 = 25000
(6) Debt to Asset Ratio = Total Debt/Total Asset
= Total Debt = Short term Debt + Long Term Debt
Debt for 2017 = 80000 + 85000 = 165000
Debt for 2018 = 75000 + 80000 = 155000
2017
2018
(1) Profit Margin
(30000/650000)
=4.6%
(45000/700000)
=6.4%
(2) Asset Turnover
(650000/566500)
=1.2 times
(700000/620000)
=1.1 times
(3) Earning per share (weighted avg common share in 2018 were 32000 & in 2017 is 31000)
(30000/31000)
=0.97
(45000/32000)
=1.41
(4) Price Earning Ratio
(5/0.97)
=5.2 times
(8/1.41)
=5.7 times
(5) Payout Ratio
(18000/30000)
=60 %
(25000/45000)
=55.6 %
(6) Debt to Asset Ratio
(165000/600000)
=27.5 %
(155000/640000)
=24.2%