Income Statement – Fiction, INC Sales 2,000,000 Cost of goods sold 1,400,000 Gro
ID: 2716686 • Letter: I
Question
Income Statement – Fiction, INC
Sales 2,000,000
Cost of goods sold 1,400,000
Gross Profit 600,000
Operating expenses
Selling & Marketing 100,000
Administrative 80,000
Depreciation 50, 000
Total operating expenses 230,000
Operating income (operating profits) 370, 000
Interest expense 50,000
Earnings before tax 320, 000
Income taxes 80,000
Net Income 240,000
Total number of sharing outstanding= 100, 000
Current market share = $41.40
Earnings per share (EPS) = 2.40
Dividends per share = $1.10
Balance Sheet – Fiction, INC
Assets
Cash 150,000
Accounts receivables 250, 000
Inventory 500,000
Total Current Assets 900,000
Gross planet & equip 2,200,000
Less accumulated depreciation 650,000
Net property, plant & equip 1,550,000
Total assets 2,450,000
Debt & Equity
Account Payable 145,000
Accruals 90,000
S. T. Note 310,000
Total Current Liabilities 545,000
Long-term debt 625,000
Total debt 1,170,000
Common stockholders equity
Common Stockholder equity 100,000
Paid-In capital 300,000
Retained earnings 880,000
Total common equity 1,280,000
Total liabilities & equity 2,450,000
What is the current ratio of this firm?
· What is the quick ratio of this firm?
· What is the inventory turnover ratio of this firm?
· What is the receivables turnover of this firm?
· What is the total asset turnover of this firm?
· What is the times interest earned (TIE) of this firm?
· What is the total debt ratio of this firm?
· What is the return on equity (ROE) of this firm?
· What is the return on assets (ROA) of this firm?
· What is the market-to-book ratio of this firm?
· What is the price-to-earnings (P/E) ratio of this firm?
Each question has to be answered, along with the work being shown.
Explanation / Answer
Total Current assets $ 900,000 Total current liabilities $ 545,000 Current Ratio = Current assets / current liabilities 1.65 Total Current assets $ 900,000 Inventory $ 500,000 Total current liabilities $ 545,000 Quick ratio = Total current assets - inventory / Current liability 0.73 Sales $ 2,000,000 Inventory $ 500,000 Inventory turnover ratio = sales / inventory 4 Sales (Assuming all the sales is credit sales $ 2,000,000 Average accounts receivable = (begining + closing) / 2 $ 125,000 Receivables turnover = Credit sales / Average receivables 16 Sales $ 2,000,000 Total Assets $ 2,450,000 Total assets turnover = Sales / Total Assets 0.8163 EBIT $ 370,000 Interest expenses $ 50,000 Times interest earned (TIE) = EBIT / Interest expenses 7.4 Total debts $ 1,170,000 Total Assets $ 2,450,000 Total debt ratio = total Debts / total Assets 0.4776 Net Income $ 240,000 Shareholder's Equity = common stock + paid in capital + retailed earning $ 1,280,000 Return on equity = Net income / Shareholder's equity 0.1875 Net Income $ 240,000 Average total Assets = Beginning assets + closing assets / 2 $ 1,225,000 Return on assets = net income / average total assets 0.1959 Market value of the firm = price per share x number of share outstanding $ 4,140,000 Book value of the firm $ 2,450,000 market-to-book = market value of firm / book value of firm 1.69 Market value per share $ 41.40 earning per share $ 2.40 price-to-earnings = market value per share / eps 17.25