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EXERCISE Recent financial statements for Madison Corporation, a company that sells drilling equipment, are given below: Selected Financial Ratios (LO3, LO4) MADISON CORPORATION Balance Sheet une 30 Assets Current assets: $ 21,000 Cash. Accounts receivable, net Merchandise inventory 160,000 300,000 9,000 (continued) Chapter 14 MADISON CORPORATION Balance Sheet June 30 (concluded) 490.000 Total current assets Property and equipment, net.. Total assets 810.000 $1,300,000 Liabilities and Stockholders' Equity Liabilities: Current Bonds payable, 10% s 200,000 300.000 500,000 Total liabilities Stockholders" equity: Common stock, $5 par value. Retained . $100,000 700,000 earnings 800,000 1.300,000 MADISON CORPORATION Income Statement For the Year Ended June 30 $2.100,000 Less cost of goods sold. Gross margin. Less operating expenses Net operating income. .. 1.260,000 840,000 660,000 180,000 30,000 150,000 45,000 Net income belore taxes Less income taxes. Account balances at the beginning of the company's fiscal year were: accounts receivable, $140.00 and inventory, $260,000. All sales were on account. Required: Compute financial ratios as follows: I. Gross margin percentage. 2. Current 3. Acid-test (quick) ratio. 4. Accounts receivable turnover in days 5. Inventory turnover in days 6. Debt-to-equity ratic. 7. Times interest earned 8. Book value per share ratioratio.e in days EXERCISE 49 Selected Financial Ratios for Common Stockholders (LO2) Refer to the frinancial statements for Madison Corporation in Exercise 14-8. In addition to the data in these statements, assume that Madison Corporation paid dividends of $3.15 per share during the yealt. sume that the company's common stock had a market price of $63 per share on June 30 and thene change in the number of outstanding shares of common stock during the fiscal year. Problems Required: Compute the following: 1. Earnings per share. 2. Dividend payout ratio. 3. Dividend yield ratio. 4. Price-earnings ratio. EXERCISE 10 1 Selected Financial Ratios for Common Stockholders (L02) Refer to the inancial statements for Madison Corporation in Exercise 14-8. Assets at the beginning of the year totaled $1,100,000, and the stockholders' equity totaled $725,000. LS Required: Compute the following: 2. Return on common stockholders' equity 3. Was financial leverage positive or negative for the year? Explain. PRO LOLL03.LO) CHECK FIG

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