80.2K

Verified Solution

Link Copied!

VERNON COMPANY
Balance Sheets As of December 31
	Year 4				Year 3
Assets
Current assets
Cash	$	24,500			$	20,500
Marketable securities		21,700				7,700
Accounts receivable (net)		58,000				50,000
Inventories		143,000				151,000
Prepaid items		27,000				12,000
Total current assets		274,200				241,200
Investments		32,000				25,000
Plant (net)		295,000				280,000
Land		27,000				22,000
Total assets	$	628,200			$	568,200
Liabilities and Stockholders Equity
Liabilities
Current liabilities
Notes payable	$	35,200			$	10,200
Accounts payable		103,800				90,000
Salaries payable		26,000				20,000
Total current liabilities		165,000				120,200
Noncurrent liabilities
Bonds payable		150,000				150,000
Other		32,000				27,000
Total noncurrent liabilities		182,000				177,000
Total liabilities		347,000				297,200
Stockholders equity
Preferred stock, (par value $10, 5% cumulative, non-participating; 7,000 shares authorized and issued)		70,000				70,000
Common stock (no par; 50,000 shares authorized; 10,000 shares issued)		70,000				70,000
Retained earnings		141,200				131,000
Total stockholders equity		281,200				271,000
Total liabilities and stockholders equity	$	628,200			$	568,200

VERNON COMPANY
Statements of Income and Retained Earnings For the Years Ended December 31
	Year 4				Year 3
Revenues
Sales (net)	$	400,000			$	380,000
Other revenues		11,400				8,400
Total revenues		411,400				388,400
Expenses
Cost of goods sold		200,000				154,000
Selling, general, and administrative		72,000				67,000
Interest expense		13,100				12,300
Income tax expense		108,000				107,000
Total expenses		393,100				340,300
Net earnings (net income)		18,300				48,100
Retained earnings, January 1		131,000				91,000
Less: Preferred stock dividends		3,500				3,500
Common stock dividends		4,600				4,600
Retained earnings, December 31	$	141,200			$	131,000

Required Calculate the following ratios for Year 4 and Year 3. a. Working capital. b. Current ratio. (Round your answers to 2 decimal places.) c. Quick ratio. (Round your answers to 2 decimal places.) d. Receivables turnover (beginning receivables at January 1, Year 3, were $51,000). (Round your answers to 2 decimal places.) e. Average days to collect accounts receivable. (Use 365 days in a year. Round your intermediate calculations to 2 decimal places and your final answers to the nearest whole number.) f. Inventory turnover (beginning inventory at January 1, Year 3, was $157,000). (Round your answers to 2 decimal places.) g. Number of days to sell inventory. (Use 365 days in a year. Round your intermediate calculations to 2 decimal places and your final answers to the nearest whole number.) h. Debt-to-assets ratio. (Round your answers to the nearest whole percent.) i. Debt-to-equity ratio. (Round your answers to 2 decimal places.) j. Number of times interest was earned. (Round your answers to 2 decimal places.) k. Plant assets to long-term debt. (Round your answers to 2 decimal places.) l. Net margin. (Round your answers to 2 decimal places.) m. Turnover of assets (average total assets in Year 3 is $568,200). (Round your answers to 2 decimal places.) n. Return on investment (average total assets in Year 3 is $568,200). (Round your answers to 2 decimal places.) o. Return on equity (average stockholders' equity in Year 3 is $271,000). (Round your answers to 2 decimal places.) p. Earnings per share (total shares outstanding is unchanged). (Round your answers to 2 decimal places.) q. Book value per share of common stock. (Round your answers to 2 decimal places.) r. Price-earnings ratio (market price per share: Year 3, $12.60; Year 4, $14.20). (Round your intermediate calculations and final answer to 2 decimal places.) s. Dividend yield on common stock. (Round your answers to 2 decimal places.)

Answer & Explanation Solved by verified expert

See Answer