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P18-2A The comparative statements of Villa Tool Company are presented below. VIL

ID: 2347614 • Letter: P

Question

P18-2A

The comparative statements of Villa Tool Company are presented below.
VILLA TOOL COMPANY
Income Statement

For the Year Ended December 31

2013 2012
Net sales $1,818,500 $1,750,500
Cost of goods sold
1,011,500


996,000

Gross profit 807,000 754,500
Selling and administrative expense
516,000


479,000

Income from operations 291,000 275,500
Other expenses and losses
Interest expense
18,000


14,000

Income before income taxes 273,000 261,500
Income tax expense
81,000


77,000

Net income
$ 192,000


$ 184,500


VILLA TOOL COMPANY
Balance Sheets

December 31

Assets 2013 2012
Current assets
Cash $ 60,100 $ 64,200
Short-term investments 69,000 50,000
Accounts receivable (net) 117,800 102,800
Inventory
123,000


115,500

Total current assets
369,900


332,500

Plant assets (net)
600,300


520,300

Total assets
$970,200


$852,800


Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $160,000 $145,400
Income taxes payable
43,500


42,000

Total current liabilities
203,500


187,400

Bonds payable
200,000


200,000

Total liabilities
403,500


387,400

Stockholders' equity
Common stock ($5 par) 280,000 300,000
Retained earnings
286,700


165,400

Total stockholders' equity
566,700


465,400

Total liabilities and stockholders' equity
$970,200


$852,800


All sales were on account. The allowance for doubtful accounts was $3,200 on December 31, 2013, and $3,000 on December 31, 2012.

Instructions

Compute the following ratios for 2013. (Weighted average common shares in 2013 were 57,000.) (a) Earnings per share. (b) Return on common stockholders' equity. (c) Return on assets. (d) Current. (e) Acid-test. (f) Receivables turnover. (g) Inventory turnover. (h) Times interest earned. (i) Asset turnover. (j) Debt to total assets. (Round earnings per share, current ratio and acid-test ratio to 2 decimal places, e.g. 10.50. Round other answers to 1 decimal place, e.g. 10.5.)

(a) Earnings per share $
(b) Return on common stockholders; equity %
(c) Return on assets %
(d) Current :1
(e) Acid-test :1
(f) Receivables turnover times
(g) Inventory turnover times
(h) Times interest earned times
(i) Asset turnover times
(j) Debt to total assets %

Explanation / Answer

Return on equity solution?