The comparative financial statements of Automotive Solutions Inc. are as follows
ID: 2563154 • Letter: T
Question
The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $57 on December 31, 20Y8 AUTOMOTIVE SOLUTIONS INC. Compar ative Income Statement For the Years Ended December 31, 20Y8 and 20Y7 20Y8 20Y7 $2,410,500 (827,410) $1,583,090 $(709,660) (416,780) (1,126,440) $456,650 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other revenue and expense: $2,616,320 (899,360) $1,716,960 $(592,020) (504,310) (1,096,330) $620,630 29,150 (96,800) $389,000 (46,800) $342,200 Other income Other expense (interest) Income before income tax Income tax expense Net income 32,670 (176,000) $477,300 (57,300) $420,000 AUTOMOTIVE SOLUTIONS INC. Comparative Statement of Stockholders' Equity For the Years Ended December 31, 20Y8 and 20Y7 20Y8 20Y7 Common Stock $460,000 Retained Earnings $1,670,900 342,200 Preferred Common Retained Preferred Earnings $1,957,700 Stock Stock Stock Balances, Jan. 1 Net income Dividends $400,000 $460,000 $400,000 420,000 (14,000) (41,400) $2,322,300 (14,000) (41,400) $1,957,700 Preferred stock Common stock Balances, Dec. 31 $400,000 $460,000 $400,000 $460,000Explanation / Answer
Sno Particulars Amount Ratio 1 Working capital Current assets 2,958,617 Less:- Current liabilities 664,070 Working capital 2,294,547 2 Current ratio Current assets (a) 2,958,617 Current liabilities (b) 664,070 Current assets / Current liabilities (a/b) 4.46 3 Quick ratio Current assets Cash 448,370 Temporary investment 678,620 Account receivable 481,800 Current assets (a) 1,608,790 Current liabilities (b) 664,070 Quick ratio (a/b) 2.42 4 Account receivable turnover Average account receivable Opening account receivable (a) 452,600 Closing account receivable (b) 481,800 Average account receivable (a+b)/2 = (d) 467,200 Sales (c) 2,616,320 Account receivable turn over (c/d) 5.60 5 Day's sales in receivable Account receivable turn over (a) 5.6 No. of days (b) 365 Day's sales in receivable (b/a) 65.18 6 Inventory turnover Average inventory Opening inventory (a) 277,400 Closing inventory (b) 365,000 Average inventory (a+b)/2 =(d) 321,200 Cost of goods sold (c) 899,360 Inventory turnover (c/d) 2.80 7 Days sales in inventiry Inventory turnover (a) 2.8 No. of days (b) 365 Days sales in inventiry (b/a) 130.36 8 Debt ratio Total assets (a) 6,046,370 Total liabilities (b) 2,864,070 Debt ratio (b/a) 0.47 9 Ratio of liabilties to stockholders' equity Total liabilities (a) 2,864,070 Stockholders' equity (b) 3,182,300 Ratio of liabilties to stockholders' equity (a/b) 0.90 10 Ratio to fixed assets to long term liabilities Fixed assets (a) 2,860,000 Long term liabilities (b) 2,200,000 Ratio to fixed assets to long term liabilities (a/b) 1.30 11 Times interest earned Earnings before interest and tax (a) 653,300 Interest expense (b) 176,000 Times interest earned (a/b) 3.71 12 Times preferred dividends earned Net income (a) 420,000 Preferred dividend (b) 14,000 Times preferred dividends earned (a/b) 30.00 13 Asset turnover ratio Sales (a) 2,616,320 Total assets (b) 6,046,070 Asset turnover ratio (a/b) 0.43 14 Retun on total assets Net income (a) 420,000 Total assets (b) 6,046,070 Retun on total assets (a/b) 0.07 15 Return on stockholders' equity Net income (a) 420,000 Stockholders' equity (b) 3,182,300 Return on stockholders' equity (a/b) 0.13 16 Return on common stockholders' equity Net income 420,000 less:- preferred stock dividend 14,000 Net income available for common equity (a) 406,000 Common stockholders' equity (b) 2,782,300 Return on common stockholders' equity (a/b) 0.15 17 Earning per share on common stock Net income available for common equity (a) 406,000 No. of common equity share (b) 46,000 Earning per share on common stock (a/b) 8.83 18 Price earning ratio EPS (a) 8.8 Price (b) 57 Price earning ratio (b/a) 6.46 19 Dividend per share of common stock Total dividend (a) 41,400 No. of common equity share (b) 46,000 Dividend per share of common stock (a/b) 0.90 20 Dividend yield Dividend per share of common stock (a) 0.90 Price (b) 57 Dividend yield (a/b) 0.02