The Problem is:
The balance sheet fot the BDare Company showed liabilities and stockholders' equity balances at the end of each year as given below:
____________________________ 2008_________ 2007
Current Liabilities... 750,000... 600,000
12% Bonds payable... 1,200,000... 1,200,000
Preferred 10% stock, $100 par... 900,000... 750,000
common stock, $20 par... 250,000... 1,875,000
Additional paid-in capital... 450,000... 375,000
Retained earnings... 750,000... 540,000
Net income... 375,000... 300,000
Market price per share,
December 31... 65... 60
Common stock dividends... 75,000... 45,000
Required: Compute the ratios for 2008
1. the rate of earnings on average total stockholders' equity.
2,350,000 / 1,950,000 = 1.205%
to the number of times bond interest requirements were earned.
375,000 / 150,000 = 2.5%
3 The earnings per share on common stock.
375,000 / 9000 +12,500 = 17.44%
4. The price-earnings ratio.
65 / 20 = 3.25
5. Debt-to equity ratio.
1,950,000 / 2,350,000 =.82
Is this correct?
If not please help.
