Comparative financial statements for Heritage Antiquing Services for the fiscal

Question

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 $0.50. The market value of the company’s common stock at the end of the year was $25. All of the company’s sales are on account.

Compute the following financial ratios for common stockholders for this year:

Exercise 15-2 Financial Ratios for Common Stockholders [LO2] 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 $0.50. The market value of the company's common stock at the end of the year was $25. 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 Accounts receivable, net Inventory Prepaid expenses $ 1,240 $ 1,250 6,800 12,100 580 10,400 13,400 620 Total current assets 25,66020,730 Property and equipment: 9,300 9,300 Buildings and equipment, net Total property and equipment Total assets 43,680 39,920 52,98049,220 $78,640 $69,950 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued payables Notes payable, short term $19,900 $18,800 840 150 910 150 20,960 9,000 19,790 9,000 29,96028,790 Total current liabilities Long-term liabilities: Bonds payable Total liabilities

Explanation / Answer

No. Ratio Formula 1. Gross margin percentage Gross margin / Sales x 100 43.84% 2. Earnings per share of common stock Net income remaining for common stockholders / Number of shares of common stock outstanding $ 13.03 3. Price-earnings ratio Market price per share / EPS 1.92 4. Dividend payout ratio Dividend per share / Earning per share 3.84% 5. Dividend yield ratio Dividend per share / Market price per share x 100 2% 6. Return on total assets Net income / Average total assets 10.58% 7. Return on common stockholders' equity Net income / Average common stockholders' equity 17.81% 8. Book value per share Common Stockholders' equity / Number of shares of common stock outstanding $ 79.47

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