Problem 13-2A The comparative statements of Carla Vista Co. are presented here.
ID: 2408374 • Letter: P
Question
Problem 13-2A
The comparative statements of Carla Vista Co. are presented here.
CARLA VISTA CO.
Income Statements
For the Years Ended December 31
2017
2016
$1,898,540
$1,758,500
1,066,540
1,014,000
832,000
744,500
508,000
487,000
324,000
257,500
23,700
21,700
300,300
235,800
93,700
74,700
$ 206,600
$ 161,100
CARLA VISTA CO.
Balance Sheets
December 31
Assets
2017
2016
$ 60,100
$ 64,200
74,000
50,000
125,800
110,800
127,700
117,200
387,600
342,200
664,000
535,300
$1,051,600
$877,500
Liabilities and Stockholders’ Equity
$ 168,000
$153,400
45,200
43,700
213,200
197,100
235,000
215,000
448,200
412,100
290,000
300,000
313,400
165,400
603,400
465,400
$1,051,600
$877,500
All sales were on account. Net cash provided by operating activities for 2017 was $229,000. Capital expenditures were $137,000, and cash dividends were $58,600.
Compute the following ratios for 2017. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)
Open Show Work
Your answer is partially correct. Try again.Explanation / Answer
(a) Earnings per share
Earnings per share = [ Net Income / Weighted Average number of common shares ]
= $206,600 / [ (58,000 Shares + 60,000 Shares) / 2 ]
= $206,600 / 59,000 Shares
= $3.50 per share
(b) Return on common stockholders’ equity
Return on common stockholders’ equity = [ Net Income / Average common stockholders’ equity ]
= [ $206,600 / { (603,400 + 465,400) /2} ] x 100
= 38.66%
(c) Return on assets
Return on assets = [ Net Income / Average Total Assets ]
= [ $206,600 / { (10,51,600 + 877,500 /2} ] x 100
= 21.42%
(d) Current ratio
Current ratio = Total Current Assets / Total Current Liabilities
= $387,600 / 213,200
= 1.82 : 1
(e) Accounts receivable turnover
Accounts receivable turnover = Net Sales / Average Accounts Receivable
= $1,898,540 / [ (125,800 + 110,800) / 2 ]
= 16.05 Times
(f) Average collection period
Average collection period = 365 Days / 16.05 Times
= 22.74 Days
(g) Inventory turnover
Inventory turnover = Cost of goods sold /Average Inventory
= $10,66,540 / [ (127,700 + 117,200 ) / 2 ]
= 8.71 Times
(h) Days in inventory
Days in inventory = 365 Days / Inventory turnover
= 365 Days / 8.71
= 41.91 Days
(i) Times interest earned
Times interest earned = [ Net Income + Income Tax + Interest Expenses ] / Interest Expenses
= [ 206,600 + 93,700 + 23,700 ] / 23,700
= 13.68 Times
(j)Asset turnover
Asset turnover = Sales / Average Total Assets
= $18,98,540 / { (10,51,600 + 877,500 /2}
= 1.97 Times
(k) Debt to assets ratio
Debt to assets ratio = Total Debt / Total Assets
= 448,200 / $1,051,600
= 42.62%
(l) Free cash flow
Free cash flow = Net cash provided by operating activities - Capital expenditures - cash dividends
= $229,000 – 137,000 – 58,600
= $ 33,400