The comparative statements of Osborne Company are presented here. OSBORNE COMPAN
ID: 2471569 • Letter: T
Question
The comparative statements of Osborne Company are presented here.
OSBORNE COMPANY
Income Statements
For the Years Ended December 31
2014
2013
$1,893,680
$1,753,640
1,061,680
1,009,140
832,000
744,500
503,140
482,140
328,860
262,360
23,975
21,975
304,885
240,385
93,975
74,975
$ 210,910
$ 165,410
OSBORNE COMPANY
Balance Sheets
December 31
Assets
2014
2013
$ 60,100
$ 64,200
74,000
50,000
120,940
105,940
127,975
117,475
383,015
337,615
663,467
534,767
$1,046,482
$872,382
Liabilities and Stockholders’ Equity
$ 163,140
$148,540
45,475
43,975
208,615
192,515
234,467
214,467
443,082
406,982
290,000
300,000
313,400
165,400
603,400
465,400
$1,046,482
$872,382
All sales were on account. Net cash provided by operating activities for 2014 was $241,180. Capital expenditures were $135,730, and cash dividends were $62,910.
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$1,893,680
$1,753,640
Cost of goods sold1,061,680
1,009,140
Gross profit832,000
744,500
Selling and administrative expenses503,140
482,140
Income from operations328,860
262,360
Other expenses and losses Interest expense23,975
21,975
Income before income taxes304,885
240,385
Income tax expense93,975
74,975
Net income$ 210,910
$ 165,410
Explanation / Answer
Earning per share = Net income / Common stock 210,910/(290,000/5) = $3.64 Return on common stock holders equity = Net income / Common stock holders equity $210,910 / ((290,000+300,000)/2) = 71.49% Return on total assets = Net income / Average total Assets $210,910 / (($1,046,482+$872,382)/2) = 21.98% Current Ratio = Current assets / Current Liabilities $383,015/208,615 = 1.84:1 Accounts Receiveble Turnover ratio = Net credit sales / Average accounts Receiveble 1,893,680/((120,940+105,940)/2) = 16.69 Times Average collection period = 365/Accounts Receiveble turnover ratio 365 / 16.69 = 21.87 Days Inventory turn over ratio = Cost of goods sold / Average inventory 1,061,680/((127,975+117,475)/2) = 8.65 Times Number of days sales in inventory = Ending inventory / Cost of goods sold * 365 127,975/ 1,061,680 * 365= 44 Days Times Interest Earned = Income before interest and taxes / Interest Expenses ($304,885+23,975)/23,975 = 13.72 Times Assets Turnover ratio = Net Sales / Average total Assets $1,893,680 / (($1,046,482+$872,382)/2) = 1.97 Times Debt to assets = Total Liabilities / Total Assets 443,082/1,046,482 = 42.34% Current Cash debt coverage ratio = Net cash provided by operating activities / Average current liabilities 241,180 / ((208,615+192,515)/2) = 1.20 Times Cash debt coverage ratio = Net cash provided by operating activities / Average liabilities 241,180 / ((443,082+406,982)/2) = 0.57 Times Free Cash flow = Operating Cash flow - Capital Expenditure 241,180-135,730 = $105,450