1.
Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or preferred stock during the year. A total of 500 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $1.00. The market value of the company’s common stock at the end of the year was $26. All of the company’s sales are on account.
Heritage Antiquing Services
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current assets:
Cash $ 1,120 $ 1,330
Accounts receivable, net 9,600 6,800
Inventory 14,000 12,300
Prepaid expenses 730 670
Total current assets 25,450 21,100
Property and equipment:
Land 10,100 10,100
Buildings and equipment, net 40,448 39,404
Total property and equipment 50,548 49,504
Total assets $ 75,998 $ 70,604
Heritage Antiquing Services
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales $ 68,000 $ 64,000
Cost of goods sold 40,000 38,000
Gross margin 28,000 26,000
Selling and administrative expenses:
Selling expenses 11,500 10,500
Administrative expenses 6,400 6,700
Total selling and administrative expenses 17,900 17,200
Net operating income 10,100 8,800
Interest expense 960 960
Net income before taxes 9,140 7,840
Income taxes 3,656 3,136
Net income 5,484 4,704
Dividends to preferred stockholders 50 370
Net income remaining for common stockholders 5,434 4,334
Dividends to common stockholders 500 500
Net income added to retained earnings 4,934 3,834
Retained earnings, beginning of year 35,274 31,440
Retained earnings, end of year $ 40,208 $ 35,274
Required:
Compute the following financial ratios for common stockholders for this year:
1 Gross margin percentage. (Round your answer to 1 decimal place. Omit the "%" sign in your response.)
Gross margin percentage %
2 Earnings per share of common stock. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Earnings $ per share
3 Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.)
Price-earnings ratio
4 Dividend payout ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place. Omit the "%" sign in your response.)
Dividend payout ratio %
5 Dividend yield ratio. (Round your answer to 1 decimal place. Omit the "%" sign in your response.)
Dividend yield ratio %
6 Return on total assets. (Round your answer to 1 decimal place. Omit the "%" sign in your response.)
Return on total assets %
7 Return on common stockholders' equity. (Round your answer to 1 decimal place. Omit the "%" sign in your response.)
Return on common stockholders' equity %
8 Book value per share. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Book value $ per share
2.
value:
41.00 points
Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or preferred stock during the year. A total of 600 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.75. The market value of the company’s common stock at the end of the year was $21. All of the company’s sales are on account.
Heritage Antiquing Services
Comparative Balance Sheet
(dollars in thousands)
Heritage Antiquing Services
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales $ 74,385 $ 66,000
Cost of goods sold 46,620 39,000
Gross margin 27,765 27,000
Selling and administrative expenses:
Selling expenses 10,600 10,300
Administrative expenses 6,800 6,100
Total selling and administrative expenses 17,400 16,400
Net operating income 10,365 10,600
Interest expense 990 990
Net income before taxes 9,375 9,610
Income taxes 3,750 3,844
Net income 5,625 5,766
Dividends to preferred stockholders 40 320
Net income remaining for common stockholders 5,585 5,446
Dividends to common stockholders 450 450
Net income added to retained earnings 5,135 4,996
Retained earnings, beginning of year 35,736 30,740
Retained earnings, end of year $ 40,871 $ 35,736
Required:
Compute the following financial data for short-term creditors for this year:
1 Working capital. (Enter your answer in thousands of dollars. Omit the "$" sign in your response.)
Working capital $
2 Current ratio. (Round your answer to 2 decimal places.)
Current ratio
3 Acid-test ratio. (Round your answer to 2 decimal places.)
Acid-test ratio
4 Accounts receivable turnover. (Round your answer to 1 decimal place.)
Accounts receivable turnover
5 Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)
Average collection period days
6 Inventory turnover. (Round your answer to 1 decimal place.)
Inventory turnover
7 Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)
Average sale period days
3.
value:
12.00 points
Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or preferred stock during the year. A total of 600 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $1.00. The market value of the company’s common stock at the end of the year was $24. All of the company’s sales are on account.
Heritage Antiquing Services
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current assets:
Cash $ 1,240 $ 1,410
Accounts receivable, net 11,000 7,200
Inventory 12,600 11,200
Prepaid expenses 680 500
Total current assets 25,520 20,310
Property and equipment:
Land 10,600 10,600
Buildings and equipment, net 43,348 38,244
Total property and equipment 53,948 48,844
Total assets $ 79,468 $ 69,154
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 20,400 $ 18,700
Accrued payables 920 800
Notes payable, short term 0 190
Total current liabilities 21,320 19,690
Long-term liabilities:
Bonds payable 9,600 9,600
Total liabilities 30,920 29,290
Stockholders' equity:
Preferred stock 1,000 1,000
Common stock 2,000 2,000
Additional paid-in capital 4,000 4,000
Total paid-in capital 7,000 7,000
Retained earnings 41,548 32,864
Total stockholders' equity 48,548 39,864
Total liabilities and stockholders' equity $ 79,468 $ 69,154
Heritage Antiquing Services
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales $ 71,000 $ 65,000
Cost of goods sold 36,000 42,000
Gross margin 35,000 23,000
Selling and administrative expenses:
Selling expenses 11,300 10,600
Administrative expenses 7,200 6,900
Total selling and administrative expenses 18,500 17,500
Net operating income 16,500 5,500
Interest expense 960 960
Net income before taxes 15,540 4,540
Income taxes 6,216 1,816
Net income 9,324 2,724
Dividends to preferred stockholders 40 400
Net income remaining for common stockholders 9,284 2,324
Dividends to common stockholders 600 600
Net income added to retained earnings 8,684 1,724
Retained earnings, beginning of year 32,864 31,140
Retained earnings, end of year $ 41,548 $ 32,864
Required:
Compute the following financial ratios for long-term creditors for this year:
1 Times interest earned ratio. (Round your answer to 1 decimal place. )
Times interest earned ratio
2 Debt-to-equity ratio. (Round your answer to 2 decimal places.)
Debt-to-equity ratio
Answer will be sent by email as attachment.
