Problem 13-2A The comparative statements of Osborne Company are presented here.
ID: 2456244 • Letter: P
Question
Problem 13-2A
The comparative statements of Osborne Company are presented here.
OSBORNE COMPANY
Income Statements
For the Years Ended December 31
2014
2013
$1,897,028
$1,756,988
1,065,028
1,012,488
832,000
744,500
506,488
485,488
325,512
259,012
23,499
21,499
302,013
237,513
93,499
74,499
$ 208,514
$ 163,014
OSBORNE COMPANY
Balance Sheets
December 31
Assets
2014
2013
$ 60,100
$ 64,200
74,000
50,000
124,288
109,288
127,499
116,999
385,887
340,487
662,950
534,250
$1,048,837
$874,737
Liabilities and Stockholders’ Equity
$ 166,488
$151,888
44,999
43,499
211,487
195,387
233,950
213,950
445,437
409,337
290,000
300,000
313,400
165,400
603,400
465,400
$1,048,837
$874,737
All sales were on account. Net cash provided by operating activities for 2014 was $221,730. Capital expenditures were $136,040, and cash dividends were $60,514.
Compute the following ratios for 2014. (Round all answers to 2 decimal places, e.g. 1.83 or 12.61%.)
OSBORNE COMPANY
Income Statements
For the Years Ended December 31
2014
2013
Net sales$1,897,028
$1,756,988
Cost of goods sold1,065,028
1,012,488
Gross profit832,000
744,500
Selling and administrative expenses506,488
485,488
Income from operations325,512
259,012
Other expenses and losses Interest expense23,499
21,499
Income before income taxes302,013
237,513
Income tax expense93,499
74,499
Net income$ 208,514
$ 163,014
Explanation / Answer
(a) Earnings per Share = Net Income/No. of common stock shares = 3.60 $ per share (b) Return on Common Stockholders' Equity = Net Income/Total Stockholders' Equity = 36.21% (c) Return on Assets = Net Income/Total Assets = 19.88% (d) Current Ratio = Current Assets/Current Liabilities = 1.82 (e) Accounts Receivable Turnover = Net Credit Sales/Average Accounts Receivable (Opening + Closing) = 16.24 times (f) Average Collection Period = No. of days in a year/Accounts Receivable Turnover = 22.47 days (g) Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory (Opening + Closing) = 8.71 times (h) Days in Inventory = No. of days in a year/Inventory Turnover Ratio = 41.90 days (i) Times Interest Earned = Income before Income Taxes/Interest Expense = 12.85 times (j) Asset Turnover = Net Sales/Total Assets = 1.81 times (k) Debt to Asset Ratio (%) = Total Debt/Total Assets = 22.31% (l) Current Cash Debt Coverage Ratio = Net Cash Provided by Operating Activities/Average Current Liabilities (Opening + Closing) = 1.09 times (m) Cash Debt Coverage Ratio = Net Cash Provided by Operating Activities/Average Total Liabilities (Opening + Closing) = 0.52 times (n) Free Cash Flow = Cash Provided by Operating Activities - Capital Expenditure - Dividends Paid = 25176 $