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CP13-2 Analyzing Comparative Financial Statements Using Selected Ratios [LO 13-4, LO 13-5]

The comparative financial statements prepared at December 31 for Golden Corporation showed the following summarized data:

	Current			Previous
Income Statement
Sales revenue	$	215,000		$	193,000
Cost of goods sold		124,000			114,000
Gross profit		91,000			79,000
Operating expenses		60,300			56,000
Interest expense		3,400			3,300
Income before income taxes		27,300			19,700
Income tax expense		8,190			3,700
Net income	$	19,110		$	16,000
Balance Sheet
Cash	$	5,410		$	8,700
Accounts receivable (net)		26,000			26,500
Inventory		47,000			42,000
Property and equipment (net)		52,000			45,000
	$	130,410		$	122,200
Current liabilities	$	16,000		$	23,900
Note payable (long-term)		52,000			52,000
Common stock (par $5)		34,200			34,200
Additional paid-in capital		6,400			5,700
Retained earnings*		21,810			6,400
	$	130,410		$	122,200

*During the current year, cash dividends of $3,700 were declared and paid. 1.) Compute the earnings per share for the current and previous years. TIP: To calculate EPS, use the balance in Common Stock to determine the number of shares outstanding. Common Stock equals the par value per share times the number of shares. (Round your answers to 2 decimal places.)

2.) Stockholders equity totaled $34,200 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. (Round your answers to 1 decimal place.)

3.) Net property and equipment totaled $38,500 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. (Round your answers to 2 decimal places.)

4.) Compute the debt-to-assets ratios for the current and previous years. (Round your answers to 2 decimal places.)

5.) Compute the times interest earned ratios for the current and previous years. (Round your answers to 1 decimal place.)

6.) After Golden released its current years financial statements, the companys stock was trading at $37. After the release of its previous years financial statements, the companys stock price was $28 per share. Compute the P/E ratios for both years. (Round your intermediate calculations and final answers to 2 decimal places.)

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