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    Apr 26, 2008, 07:36 AM
    computing ratios check
    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.

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