Problem 14-2A PAINTER TOOL COMPANY Income Statement For the Years Ended December
ID: 2431969 • Letter: P
Question
Problem 14-2A
PAINTER TOOL COMPANY
Income Statement
For the Years Ended December 31
2017
2016
PAINTER TOOL COMPANY
Balance Sheets
December 31
Assets
2017
2016
Liabilities and Stockholders’ Equity
Compute the following ratios for 2017. (Weighted-average common shares in 2017 were 50,000.) (Round Earnings per share, Current ratio and Acid-test ratio to 2 decimal places, e.g. 1.65 or 1.65:1, and all other answers to 1 decimal place, e.g. 6.8 or 6.8%.)
Problem 14-2A
The comparative statements of Painter Tool Company are presented below.PAINTER TOOL COMPANY
Income Statement
For the Years Ended December 31
2017
2016
Net sales $1,810,000 $1,745,000 Cost of goods sold 1,005,000 970,000 Gross profit 805,000 775,000 Selling and administrative expenses 511,000 472,000 Income from operations 294,000 303,000 Other expenses and losses Interest expense 17,000 13,000 Income before income taxes 277,000 290,000 Income tax expense 80,000 76,000 Net income $ 197,000 $ 214,000PAINTER TOOL COMPANY
Balance Sheets
December 31
Assets
2017
2016
Current assets Cash $59,000 $63,000 Short-term investments 68,000 49,000 Accounts receivable (net) 116,000 101,000 Inventory 122,000 114,000 Total current assets 365,000 327,000 Plant assets (net) 595,000 515,000 Total assets $960,000 $842,000Liabilities and Stockholders’ Equity
Current liabilities Accounts payable $159,000 $144,000 Income taxes payable 42,000 41,000 Total current liabilities 201,000 185,000 Bonds payable 195,000 195,000 Total liabilities 396,000 380,000 Stockholders’ equity Common stock ($5 par) 275,000 295,000 Retained earnings 289,000 167,000 Total stockholders’ equity 564,000 462,000 Total liabilities and stockholders’ equity $960,000 $842,000All sales were on account.
Compute the following ratios for 2017. (Weighted-average common shares in 2017 were 50,000.) (Round Earnings per share, Current ratio and Acid-test ratio to 2 decimal places, e.g. 1.65 or 1.65:1, and all other answers to 1 decimal place, e.g. 6.8 or 6.8%.)
(a) Earnings per share $ (b) Return on common stockholders’ equity % (c) Return on assets % (d) Current ratio :1 (e) Acid-test ratio :1 (f) Accounts receivable turnover times (g) Inventory turnover times (h) Times interest earned times (i) Asset turnover times (j) Debt to assets ratio %Explanation / Answer
a) Earning per share = 197000/50000 = 3.94 per share
b) Return on common Stockholder's equity = 197000*100/513000 = 38.4%
c) Return on assets = (197000+17000)*100/901000 = 23.8%
d) Current ratio = 365000/201000 = 1.82 : 1