Financial statements for Larkins Company appear below: Larkins Company Statement
ID: 2378085 • Letter: F
Question
Financial statements for Larkins Company appear below:Larkins Company
Statement of Financial Position
December 31, Year 2 and Year 1
(dollars in thousands)
Year 2 Year 1
Current assets:
Cash and marketable securities
180 180
Accounts receivable, net
210 180
Inventory
130 120
Prepaid expenses
50 50
Total current assets
570 530
Noncurrent assets:
Plant & equipment, net
1540 1480
Total assets
2110 2010
Current liabilities:
Accounts payable
100 130
Accrued liabilities
60 60
Notes payable, short term
90 120
Total current liabilities
250 310
Noncurrent liabilities:
Bonds payable
480 500
Total liabilities
730 810
Stockholders' equity:
Preferred stock, $20 par, 10%
120 120
Common stock, $10 par
180 180
Additional paid-in capital--common stock 240 240
Retained earnings
840 660
Total stockholders' equity
1380 1200
Total liabilities & stockholders' equity
2110 2010
Larkins Company
Income Statement
For the Year Ended December 31, Year 2
(dollars in thousands)
Sales (all on account)
2760
Cost of goods sold
1930
Gross margin
830
Selling and administrative expense
330
Net operating income
500
Interest expense
50
Net income before taxes
450
Income taxes (30%)
135
Net income
315
Dividends during Year 2 totaled $135 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $150.
Larkins Company's price-earnings ration on December 31 for Year 2 was closest to:
8.91
8.57
6.00
20.79
Financial statements for Larkins Company appear below:
Larkins Company
Statement of Financial Position
December 31, Year 2 and Year 1
(dollars in thousands)
Year 2 Year 1
Current assets:
Cash and marketable securities
180 180
Accounts receivable, net
210 180
Inventory
130 120
Prepaid expenses
50 50
Total current assets
570 530
Noncurrent assets:
Plant & equipment, net
1540 1480
Total assets
2110 2010
Current liabilities:
Accounts payable
100 130
Accrued liabilities
60 60
Notes payable, short term
90 120
Total current liabilities
250 310
Noncurrent liabilities:
Bonds payable
480 500
Total liabilities
730 810
Stockholders' equity:
Preferred stock, $20 par, 10%
120 120
Common stock, $10 par
180 180
Additional paid-in capital--common stock 240 240
Retained earnings
840 660
Total stockholders' equity
1380 1200
Total liabilities & stockholders' equity
2110 2010
Larkins Company
Income Statement
For the Year Ended December 31, Year 2
(dollars in thousands)
Sales (all on account)
2760
Cost of goods sold
1930
Gross margin
830
Selling and administrative expense
330
Net operating income
500
Interest expense
50
Net income before taxes
450
Income taxes (30%)
135
Net income
315
Dividends during Year 2 totaled $135 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $150.
Larkins Company's price-earnings ration on December 31 for Year 2 was closest to:
8.91
8.57
6.00
20.79
Explanation / Answer
8.57
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