Problem 13-2A The comparative statements of Osborne Company are presented here.
ID: 2476470 • 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
$1,899,511
$1,759,471
1,067,511
1,014,971
832,000
744,500
508,971
487,971
323,029
256,529
24,032
22,032
298,997
234,497
94,032
75,032
$ 204,965
$ 159,465
OSBORNE COMPANY
Balance Sheets
December 31
Assets
2014
2013
$ 60,100
$ 64,200
74,000
50,000
126,771
111,771
128,032
117,532
388,903
343,503
661,680
532,980
$1,050,583
$876,483
Liabilities and Stockholders’ Equity
$ 168,971
$154,371
45,532
44,032
214,503
198,403
232,680
212,680
447,183
411,083
290,000
300,000
313,400
165,400
603,400
465,400
$1,050,583
$876,483
All sales were on account. Net cash provided by operating activities for 2014 was $226,560. Capital expenditures were $135,680, and cash dividends were $56,965.
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$1,899,511
$1,759,471
Cost of goods sold1,067,511
1,014,971
Gross profit832,000
744,500
Selling and administrative expenses508,971
487,971
Income from operations323,029
256,529
Other expenses and losses Interest expense24,032
22,032
Income before income taxes298,997
234,497
Income tax expense94,032
75,032
Net income$ 204,965
$ 159,465
Explanation / Answer
outstanding common shares
=(204,965 /59,000)
= $3.47
= 204,965/295,000
=69.48%
= 204,965/963,533
=21.27%
=388,903/214,503
=1.81
= 1,899,511/119,271
=15.97 times
= 1,067,511/122,782
=8.69 times
=323,029/24,032
=13.44 times
=1,899,511/963,535
=1.97 times
=447,183/1,050,583
=42.57%
=226,560/222,680
= 1.02 times
=(226,560 /429,133
=.53 times
= 226,560 – 135,680- 56,965
=$33,915
- Earnings per share = ( net income – preferred dividend)/ average
outstanding common shares
=(204,965 /59,000)
= $3.47
- Return on common stockholder’s Equity = net income / average common stockholders’
= 204,965/295,000
=69.48%
- Return on assets = net income / average total assets
= 204,965/963,533
=21.27%
- Current ratio = Current assets / current liabilities
=388,903/214,503
=1.81
- Account receivable turnover = net sales / average account receivable
= 1,899,511/119,271
=15.97 times
- Average collection days = 365/15.97 = 22.86 days
- Inventory turnover = cost of goods sold/ average inventory
= 1,067,511/122,782
=8.69 times
- Days in inventory = 365/8.69 = 42 days
- Times interest earned = income before interest / interest expense
=323,029/24,032
=13.44 times
- Asset turnover = sale/ average total assets
=1,899,511/963,535
=1.97 times
- Debt to assets = total liabilities / total assets
=447,183/1,050,583
=42.57%
- Current cash debt coverage = net operating cash / average current liabilities
=226,560/222,680
= 1.02 times
- Cash debt coverage = (net operating cash)/ average total liabilities
=(226,560 /429,133
=.53 times
- Free cash flow = net operating cash – capital expenditure- dividend
= 226,560 – 135,680- 56,965
=$33,915