Problem 14-3A Condensed balance sheet and income statement data for Clarence Cor
ID: 2481084 • Letter: P
Question
Problem 14-3A
Condensed balance sheet and income statement data for Clarence Corporation appear below.
Clarence Corporation
Balance Sheets
December 31
2014
2013
2012
Clarence Corporation
Income Statement
For the Years Ended December 31
2014
2013
Additional information:
Compute the following ratios for 2013 and 2014. (Round Earnings per share to 2 decimal places, e.g.1.65, and all others to 1 decimal place, e.g. 6.8 or 6.8% .)
2013
2014
Clarence Corporation
Balance Sheets
December 31
2014
2013
2012
Cash $ 24,900 $ 17,200 $ 18,800 Receivables (net) 50,900 44,600 47,300 Other current assets 89,900 94,500 64,800 Investments 74,800 69,100 46,000 Plant and equipment (net) 399,500 369,300 359,000 $640,000 $594,700 $535,900 Current liabilities $69,400 $74,300 $69,200 Long-term debt 80,700 84,500 50,300 Common stock, $10 par 349,100 314,800 298,000 Retained earnings 140,800 121,100 118,400 $640,000 $594,700 $535,900Explanation / Answer
1. Profit Margin = Net Income/ Sales * 100
2013 = 34500 / 705600 * 100 = 4.89%
2014 = 58400 / 736600 * 100 = 7.93%
2. Asset Turnover = Sales / Average total assets
2013 = 705600 / 565300 = 1.25 times
2014 = 736600 / 617350 = 1.19 times
Average total assets = 2013 = 535900 + 594700 / 2 = $565300
2014 = 640000 + 594700 / 2 = $617350
3. Earnings per share = Net Income / No. of shares
2013 = 34500 / 33910 = $1.02
2014 = 58400 / 34910 = $1.67
4. Price Earnings ratio = Price / EPS
2013 = 6 / 1.02 = 5.88 times
2014 = 8 / 1.67 = 4.79 times
5. Payout = Dividend / Net income * 100
2013 = 31800 / 34500 *100 = 92.17%
2014 = 38700 / 58400 * 100 = 66.27%
6. Debt to total assets = Debt / total assets * 100
2013 = 84500 / 594700 * 100 = 14.21%
2014 = 80700 / 640000 * 100 = 12.61%
#Dividend for the year 2013 & 2014 is calculated as: Opening Balance of retained earnings + net income for the year - closing balance of retained earnings.