The comparative statements of Painter Tool Company are presented below. PAINTER
ID: 2448609 • Letter: T
Question
The comparative statements of Painter Tool Company are presented below.
PAINTER TOOL COMPANY
Income Statement
For the Years Ended December 31
2015
2014
PAINTER TOOL COMPANY
Balance Sheets
December 31
Assets
2015
2014
Liabilities and Stockholders’ Equity
All sales were on account.
Compute the following ratios for 2015. (Weighted-average common shares in 2015 were 55,600.) (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% .)
PAINTER TOOL COMPANY
Income Statement
For the Years Ended December 31
2015
2014
Net sales $1,816,270 $1,751,690 Cost of goods sold 1,009,210 982,700 Gross profit 807,060 768,990 Selling and administrative expense 519,800 475,800 Income from operations 287,260 293,190 Other expenses and losses Interest expense 18,170 14,470 Income before income taxes 269,090 278,720 Income tax expense 80,170 77,600 Net income $ 188,920 $ 201,120Explanation / Answer
Solution:
(A). Earning Per Share Caluculation:
EPS = $ 1,88,920 / $ 55,600
= $ 3.39
(B). Return on Share holder's Equity Ratio:
Return on Share holders Equity = $ 1,88,920 / $ 5,64,940
= 0.33 %
(C). Return on Asets Ratio:
Avg Total Assets = $ 9,65,720 / 2
= $ 4,82,860
Return on Asets = $ 1,88,920 / $ 4,82,860
= 0.39 %
(D). Current ratio:
Current ratio = $ 3,68,710 / $ 2,03,680
= 1.81 : 1
(E) . Acid-test ratio:
Acid-test ratio = $ 3,68,710 - $ 1,22,200 / $ 2,03,680
= $ 2,46,510 / 2,03,680
= 1.21 : 1
(F). Accounts receivable turnover Ratio:
Avg Accounts Receivables = Avg Accounts Receivables / 2
= $ 1,16,300 / 2
= $ 58,150
Accounts receivable turnover Ratio = $18,16,270 / 58,150
= 31.23 Times
(G). Inventory turnover Ratio:
Inventory turnover Ratio = $ 10,09,210 / $ 61,100
= 16.51 Times
Avg Inventory = Total Inventory / 2
= $ 1,22,200 / 2
= $61,100
(H). Times interest earned Ratio:
Times interest earned = $ 2,69,090 / $ 18,170
= 14.80 Times
(I). Asset turnover Ratio:
Asset turnover = $18,16,270 / $ 4,82,860
= 3.76 Times
(J). Debt to total assets Ratio:
Debt to total assets = $ 4,00,780 / $ 9,65,720
= 0.41%
EPS = Net Income / Average Outstanding Common Shares