Problem 13-2A The comparative statements of Osborne Company are presented here O
ID: 2461916 • 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 Net sales Cost of goods sold Gross profit Selling and administrative expenses Income from operations Other expenses and losses $1,890,540 $1,750,500 1,006,000 744,500 479,000 265,500 1,058,540 832,000 500,000 332,000 Interest expense Income before income taxes Income tax expense Net income 310,000 92,000 218.000 20,000 245,500 73,000 $ 172,500 OSBORNE COMPANY Balance Sheets December 31 Assets 2014 2013 Current assets Cash Debt investments (short-term) Accounts receivable Inventory $60,100 64,200 50,000 102,800 115,500 377,900 332,500 520,300 $852,800 74,000 117,800 126,000 Total current assets Plant assets (net) Total assets 649,000 1,026,900 abilities and Stockholders' Equi Current liabilities $160,000 $145,400 42,000 187,400 200,000 387,400 Accounts payable Income taxes payable 43,500 203,500 220,000 423,500 Total current liabilities Bonds payable Total liabilities Stockholders' equity Common stock ($5 par) Retained earnings 290,000 300,000 165,400 603,400 465,400 $1,026,900 $852.800 313,400 Total stockholders' equity Total liabilities and stockholders' equity All sales were on account. Net cash provided by operating activities for 2014 was $220,000. Capital expenditures were $136,000, and cash dividends were $70,000 Compute the following ratios for 2014, (Round all answers to 2 decimal places, e.g. 1.83 or 12.61%.)Explanation / Answer
a. Earning per share = Net Income/No. of shares = 218,000/58000 = 3.76
b. return on common share holder equity = Net Income/Shareholder equity = 218,000/603,400 = 36.13%
c.Return on Asset = Net Income/Average Asset 218,000/534,400 = 40.79%
d. Current Ratio = Current asset/Current Liability= 377,900/203,500 = 1.86:1
e.Account receivable turnover = Net credit sales/Average debtors = 1,890,540/110,300 = 17.14 times
f.Average collection period = No.of working days / Debtors turnover ratio = 360/17.14 = 21 days
g. Inventory Turnover = Cost of good sold/Average inventory = 1058540/120750 = 8.77 times
h. days in inventory = No. of working days/Inventory turnover ratio = 360/8.77 = 41.05 days
i.Times interest earned = Earning before interest & after tax / Interest expenses = 240,000/22000 = 10.91 times
j. Asset turnover = Net Sales/ Average total Asset = 1,890,540 /939,850 = 2.01 times
k. debt to asset ratio = Total Liability/Total Asset = 423500/1,026,900 = 41%
l. Current cash debt coverage = Net cash by operation/Average current liability = 220000/195450 = 1.13 times
m. Cash debt coverage = Net cash by operation/ Average total liability = 220000/405,450 = 0.54 times
n. free cash flow = operating cash flow - capital expenditure = 220000-136000= $ 84,000
6.