The comparative statements of Corbin Company are presented below. Additional dat
ID: 2453423 • Letter: T
Question
The comparative statements of Corbin Company are presented below.
Additional data:
The common stock recently sold at $19.50 per share.
Instructions
Compute the following ratios for 2015.
(a) Current ratio.
(b) Acid-test ratio.
(c) Accounts receivable turnover.
(d) Inventory turnover.
(e) Profit margin.
(f) Asset turnover.
(g) Return on assets.
(h) Return on common stockholders’ equity.
(i) Earnings per share.
(j) Price-earnings ratio.
(k) Payout ratio.
(l) Debt to assets ratio.
(m) Times interestearned.
Explanation / Answer
Answer:
Ratio Formula Description Ratio (a) Current ratio Current Asset/Current liabilities 215000/145000 1.483 (b) Acid-test ratio Quick Asset/Current liability (215000-85000)/145000 0.896 (c) Accounts receivable turnover times Net credit sales/Average accounts receivable $595000/[(91000+74000)/2] 7.212 (d) Inventory turnover times Net cogs/Average inventory $415000/[(85000+70000)/2] 5.35 (e) Profit margin % (Net Income / Net Sales (revenue))*100 (36400/595000)*100 6.12% (f) Asset turnover times Net sales/Average total assets $595000/[(638000+560000)/2] 0.9933 (g) Return on assets % (Net income/Average total assets)*100 ($36400/[(638000+560000)/2])*100 6.08% (h) Return on common stockholders’ equity % (Net income/Average stockholder's equity)*100 ($36400/[(373000+350000)/2])*100 10.07% (i) Earnings per share $ (Net income/No of shares outstanding) ($36400/(150000/5)) 1.213 (j) Price-earnings ratio times Market price per share/Earning per share 19.50/1.213 16.08 (k) Payout ratio % (opening retained earnings+netincome of current year-closing retained earnings/Net income (200000+36400-223000)/36400 36.81% (l) Debt to total assets % Total liabilities/Total Assets 265000/638000 41.54% (m) Times interest earned times EBIT/interest expense (36400+7800+15000)/7800 7.59