9.80 per share. 6 Required: Compute the following for Year 2 32 a. Gross margin

Question

9.80 per share. 6 Required: Compute the following for Year 2 32 a. Gross margin percentage. b. Earnings per share (of common stock). c. Price-earnings ratio. d. Dividend payout ratio e. Dividend yield ratico. f. Rcturn on total assets. g. Return on common stockholders' equity h. Book value per share i. Working capital. j. Current ratio. k. Acid-test ratio 1. Accounts receivable turnover m, Average collection period. n. Inventory turnover. o. Average sale period p. Times interest earned. q, Debt-to-equity ratio.- Cur,

Explanation / Answer

a) Gross Margin percentage = Gross profit / Net sales * 100    = 430 / 1130 *100 = 38.05% b) Earning per share = ( Net income - preferred dividends) / weighted average common stock outstanding           = 110/200            =0.55 c) Price earning ratio = market price per share / earning per share                                        '= 9.8/0.55                                        = 17.82 d) Dividend payout ratio = Total dividend / Net Income                                              = 40 / 110                                              = 0.36 e) Dividend yeild ratio = cash dividend per share / market value per share cash dividend per share = 40 / 200 = 0.20 Dividend yeild ratio = 0.20 / 9.8                                = 0.0204                                 = 2.04% f) Return on total assets = net Income / Average total assets Average total assets = ( 1400+1370)/2                                            = 1385 ROA = 110 / 1385           = 0.0794             = 7.94 g) Return on equity = net Income /Shareholders equity                             = 110 /(930-200)                                    = 110 / 730                                    = 0.1507                                    = 15.07 h) Book value per share = total common stockholders equity / number of common shares                                     = 730 / 200                                       = 3.65 i) Working capital = Current asset - current liabilities                                  = 620 - 250                                   = 370 j) Current ratio = current asset / current liabilities                            = 620 / 250                            = 2.48 k) Acid test ratio = ( current assets - inventory) / current liabilities                           = ( 620 - 140) / 250                                = 480/250                                 = 1.92 l) accounts receivable turnover = net credit sales / average receivables average receivables = ( 200 + 190)/2                               = 195 accounts receivable turnover = 1130 / 195                                            = 5.79 m) average collection period = Number of working days / debtors turnover ratio                                                      = 365 / 5.79                                   = 63.04 n) Inventory turnover ratio = Cost of goods sold / Average inventory Average inventory = ( 140 + 140)/2                                        = 140 Inventory turnover = 700 /140                                         = 5 o) Average sale period = 365 / Inventory turnover                                           = 365 /5                                           = 73 p) times interest earned = Earning before interets and tax / Interets exoense                                 = 186 / 29                                 = 6.41 q) debt to equity = total liabilities / total equity                                = 470 /(930-200)                                = 470/730                                = 0.64

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