Problem 14-3A Condensed balance sheet and income statement data for Landwehr Cor
ID: 2593482 • Letter: P
Question
Problem 14-3A
Condensed balance sheet and income statement data for Landwehr Corporation appear below.
LANDWEHR CORPORATION
Balance Sheets
December 31
2016
2015
2014
LANDWEHR CORPORATION
Income Statement
For the Years Ended December 31
2016
2015
Additional information:
(a)
Compute the following ratios for 2015 and 2016. (Round 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%.)
2015
2016
LANDWEHR CORPORATION
Balance Sheets
December 31
2016
2015
2014
Cash $ 26,000 $ 17,300 $ 18,000 Accounts receivable (net) 50,000 44,400 48,300 Other current assets 90,300 95,700 63,300 Investments 75,100 70,000 44,500 Plant and equipment (net) 400,900 369,700 357,100 $642,300 $597,100 $531,200 Current liabilities $74,000 $80,000 $69,400 Long-term debt 79,100 84,300 49,400 Common stock, $10 par 385,800 310,100 299,300 Retained earnings 103,400 122,700 113,100 $642,300 $597,100 $531,200Explanation / Answer
Computation of following ratios for 2015 and 2016 Formula For 2016 For 2015 1) Profit margin net income /Net sales *100 9.60% 5.40% 64100/700200 *100 35400/655600 *100 2) Asset turnover net sales /Average Assets 1.1 times 1.2 times 700200/[(642300+597100)/2] 655600/[(597100+531200)/2] 3) Earnings per shares Net Income / Weighted average Shares $1.96 $1.12 64100/32700 35400/31700 4 price earning ratio market price per share/ EPS 4.1 times 4.5 times $8/$1.96 $5/$1.12 5) Payout ratio Cash Dividend /Net Income *100 130.10% 72.9% 83400/64100 *100 25800/35400 *100 6) Debt to assets ratio Total Debt /Total Assets *100 23.80% 27.50% ($79100+74000)/642300 (84300+80000)/597100 cash Dividend = Opening Retained earnings + Net income - Closing retained Earnings For 2016 cash Dividends =122700+64100-103400 =$83400 For 2015 cash Dividends =113100+35400-122700 =$25800