The comparative financial statements of Blige Inc. are as follows. The market pr
ID: 2520509 • Letter: T
Question
The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $57 on December 31, 2016.
Required:
Determine the following measures for 2016, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.
Blige Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2016 and 2015 2016 2015 Retained earnings, January 1 $1,944,750 $1,648,550 Add net income for year 432,000 337,700 Total $2,376,750 $1,986,250 Deduct dividends On preferred stock $7,000 $7,000 On common stock 34,500 34,500 Total $41,500 $41,500 Retained earnings, December 31 $2,335,250 $1,944,750Explanation / Answer
formula calculation Answer 1. Working capital current assets - current liabilities =2688758-814775 1873983 2. Current ratio current assets / current liabilities =2688758/814775 3.30 3. Quick ratio (total current assets - inventory - prepaid expense ) /current liabilities =(2688758-408800-121788)/814775 2.65 4. Accounts receivable turnover (Net sales / average accounts receivables) =(2838240/((540200+511000)/2) 5.4 5. Number of days' sales in receivables (Average accounts receivable /average daily Net sales =((540200+511000)/2)/((2838240/365)) 67.6 6. Inventory turnover (Net sales / average inventory) =(2838240/((408800+321200)/2) 7.8 7. Number of days' sales in inventory (Average inventory /average daily Net sales =((408800+321200)/2)/((2838240/365)) 46.9 8. Ratio of fixed assets to long-term liabilities fixed assets / long term liabiltities =(3510000/2700000) 1.3 9. Ratio of liabilities to stockholders' equity (total liabilties / total shareholders equity) =(3514775/3195250) 1.10 10. Number of times interest charges are earned interest +income before income tax) / interest (216000+490900)/216000 3.27 11. Number of times preferred dividends are earned (net income / pref. dividend) (432000/(400000*0.7) 1.54 12. Ratio of sales to assets net sales /(Average total assets) =(2838240)/((6710025+5071793)/2) 0.48 13. Rate earned on total assets (Net income+interest) /(average of total assets) =(432000+261000)/(6710025+5071793)/2 2.9% 14. Rate earned on stockholders' equity Net income /(average total shareholders equity) =432000/(3195250+2804750) 7.2% 15. Rate earned on common stockholders' equity (Net income - pref dividend)/(average common shareholders equity) =(432000-28000)/((3195250-400000)+(2804750-400000))/2 3.9% 16. Earnings per share on common stock (Net income - pref dividend)/(No of equity shares) =(432000-28000)/46000 8.783 17. Price-earnings ratio Market price of share / Earning per share =57/8.783 6.49 18. Dividends per share of common stock dividend / no of share =28000/46000 0.61 19. Dividend yield Annual dividend per share /price of share =((400000/40)/46000)/57 0.4%