Can somehelp me out with this one please? *Problem 14-6A CORBIN COMPANY Income S
ID: 2556300 • Letter: C
Question
Can somehelp me out with this one please?
*Problem 14-6A
CORBIN COMPANY
Income Statement
For the Years Ended December 31
2017
2016
CORBIN COMPANY
Balance Sheets
December 31
Assets
2017
2016
Liabilities and Stockholders’ Equity
*Problem 14-6A
The comparative statements of Corbin Company are presented below.CORBIN COMPANY
Income Statement
For the Years Ended December 31
2017
2016
Net sales (all on account) $600,800 $520,200 Expenses Cost of goods sold 414,600 353,900 Selling and administrative 120,500 114,500 Interest expense 7,000 5,200 Income tax expense 17,700 13,100 Total expenses 559,800 486,700 Net income $ 41,000 $ 33,500CORBIN COMPANY
Balance Sheets
December 31
Assets
2017
2016
Current assets Cash $ 20,000 $ 19,000 Short-term investments 17,100 15,000 Accounts receivable (net) 86,100 74,800 Inventory 89,600 70,200 Total current assets 212,800 179,000 Plant assets (net) 422,300 382,900 Total assets $635,100 $561,900Liabilities and Stockholders’ Equity
Current liabilities Accounts payable $123,000 $110,800 Income taxes payable 23,100 19,000 Total current liabilities 146,100 129,800 Long-term liabilities Bonds payable 119,700 79,300 Total liabilities 265,800 209,100 Stockholders’ equity Common stock ($5 par) 152,400 152,400 Retained earnings 216,900 200,400 Total stockholders’ equity 369,300 352,800 Total liabilities and stockholders’ equity $635,100 $561,900Additional data:
The common stock recently sold at $20.54 per share.
Compute the following ratios for 2017. (Round Acid-test ratio and Earnings per share to 2 decimal places, e.g. 1.65, and all other answers to 1 decimal place, e.g. 6.8 or 6.8%.)
(a) Current ratio. :1 (b) Acid-test ratio. :1 (c) Accounts receivable turnover. times (d) Inventory turnover. times (e) Profit margin. % (f) Asset turnover. times (g) Return on assets. % (h) Return on common stockholders’ equity. % (i) Earnings per share. $ (j) Price-earnings ratio. times (k) Payout ratio. % (l) Debt to assets ratio. % (m) Times interest earned. times
Explanation / Answer
a.Current Ratio
Current Ratio = Current Assets / Current Liability
= 212800 / 146100
= 1.46 Times
b.Acid Test Ratio
Acid Test Ratio = (Current assets – Inventory) / Current Liabilities
= (212800 – 86900 ) / 146100
= 0.86 Times
c. Accounts receivable turnover.
Accounts receivable turnover = Net Sales / Average Accounts receivables
= 600800 / [(86100+74800)/2]
= 7.47 Times
d. Inventory turnover.
Inventory turnover = Cost of goods sold / Average Inventory
= 414600 / [(89600+70200)/2]
= 5.19 Times
e. Profit margin.
Profit margin = Net Income / Sales * 100
= 41000 / 600800 * 100
= 6.82 %
f. Asset turnover
Asset turnover = Net Sales / Average total assets
= 600800 / [(635100+561900)/2]
= 1 Time
g. Return on assets.
Return on assets = Net Income / Average total assets
= 41000 / [(635100+561900)/2] * 100
= 6.85 %
h. Return on common stockholders’ equity.
Return on common stockholders’ equity. = Net Income / common stockholders’ equity
= 41000 / 369300 * 100
= 11.10 %
i. Earnings per share.
Earnings per share. = Net Income / Number of common stock
= 41000 / 30480
= $ 1.34 per share
j. Price-earnings ratio
Price-earnings ratio = Market price / EPS
= 20.54 / 1.34
= 15 Times
k. Payout ratio.
Payout ratio. = 41000 / 152400 * 100
= 26.9 %
l. Debt to assets ratio.
Debt to assets ratio = Debt / Asset
= 265800 / 635100
= 0.42 Times
m. Times interest earned.
Times interest earned = (Net income + Income taxes + Interest expense) ÷ Interest expense
= (41000 + 17700+7000) / 7000
= 9.39 Times
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ALL THE BEST !!!