beauteous28
Nov 23, 2010, 07:57 AM
The comparative statements of Villa Tool Company are presented below.
VILLA TOOL COMPANY
Income Statement
For the Year Ended December 31
2009 2008
Net sales $1,818,500 $1,750,500
Cost of goods sold 1,011,500
996,000
Gross profit 807,000 754,500
Selling and administrative expense 516,000
479,000
Income from operations 291,000 275,500
Other expenses and losses
Interest expense 18,000
14,000
Income before income taxes 273,000 261,500
Income tax expense 81,000
77,000
Net income $ 192,000
$ 184,500
VILLA TOOL COMPANY
Balance Sheets
December 31
Assets 2009 2008
Current assets
Cash $ 60,100 $ 64,200
Short-term investments 69,000 50,000
Accounts receivable (net) 117,800 102,800
Inventory 123,000
115,500
Total current assets 369,900
332,500
Plant assets (net) 600,300
520,300
Total assets $970,200
$852,800
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $160,000 $145,400
Income taxes payable 43,500
42,000
Total current liabilities 203,500
187,400
Bonds payable 200,000
200,000
Total liabilities 403,500
387,400
Stockholders' equity
Common stock ($5 par) 280,000 300,000
Retained earnings 286,700
165,400
Total stockholders' equity 566,700
465,400
Total liabilities and stockholders' equity $970,200
$852,800
All sales were on account. The allowance for doubtful accounts was $3,200 on December 31, 2009, and $3,000 on December 31, 2008.
Instructions
Compute the following ratios for 2009. (Weighted average common shares in 2009 were 57,000.) (a) Earnings per share. (b) Return on common stockholders' equity. (c) Return on assets. (d) Current. (e) Acid-test. (f) Receivables turnover. (g) Inventory turnover. (h) Times interest earned. (I) Asset turnover. (j) Debt to total assets. (Round earnings per share, current ratio and acid-test ratio to 2 decimal places. Round all other answers to 1 decimal place.)
(a) Earnings per share $ 3.37
(b) Return on common stockholders; equity %
(c) Return on assets %
(d) Current 1.82 :1
(e) Acid-test :1
(f) Receivables turnover times
(g) Inventory turnover 8.5 times
(h) Times interest earned 16.2 times
(I) Asset turnover 2 times
(j) Debt to total assets 41.6 %
VILLA TOOL COMPANY
Income Statement
For the Year Ended December 31
2009 2008
Net sales $1,818,500 $1,750,500
Cost of goods sold 1,011,500
996,000
Gross profit 807,000 754,500
Selling and administrative expense 516,000
479,000
Income from operations 291,000 275,500
Other expenses and losses
Interest expense 18,000
14,000
Income before income taxes 273,000 261,500
Income tax expense 81,000
77,000
Net income $ 192,000
$ 184,500
VILLA TOOL COMPANY
Balance Sheets
December 31
Assets 2009 2008
Current assets
Cash $ 60,100 $ 64,200
Short-term investments 69,000 50,000
Accounts receivable (net) 117,800 102,800
Inventory 123,000
115,500
Total current assets 369,900
332,500
Plant assets (net) 600,300
520,300
Total assets $970,200
$852,800
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $160,000 $145,400
Income taxes payable 43,500
42,000
Total current liabilities 203,500
187,400
Bonds payable 200,000
200,000
Total liabilities 403,500
387,400
Stockholders' equity
Common stock ($5 par) 280,000 300,000
Retained earnings 286,700
165,400
Total stockholders' equity 566,700
465,400
Total liabilities and stockholders' equity $970,200
$852,800
All sales were on account. The allowance for doubtful accounts was $3,200 on December 31, 2009, and $3,000 on December 31, 2008.
Instructions
Compute the following ratios for 2009. (Weighted average common shares in 2009 were 57,000.) (a) Earnings per share. (b) Return on common stockholders' equity. (c) Return on assets. (d) Current. (e) Acid-test. (f) Receivables turnover. (g) Inventory turnover. (h) Times interest earned. (I) Asset turnover. (j) Debt to total assets. (Round earnings per share, current ratio and acid-test ratio to 2 decimal places. Round all other answers to 1 decimal place.)
(a) Earnings per share $ 3.37
(b) Return on common stockholders; equity %
(c) Return on assets %
(d) Current 1.82 :1
(e) Acid-test :1
(f) Receivables turnover times
(g) Inventory turnover 8.5 times
(h) Times interest earned 16.2 times
(I) Asset turnover 2 times
(j) Debt to total assets 41.6 %