Use the following comparative balance sheet and select income statement informat

Question

Use the following comparative balance sheet and select income statement information to answer Jonick Inc. Comparative Balance Sheet December 31, 2017 and 2016 Dec. 31, 2017 Dec. 31, 2016    ASSETS Current assets:     Cash 635,000 400,000     Marketable securities 291,000 260,000     Accounts receivable (net) 135,000 110,000     Inventories 64,000 58,000     Prepaid expenses 153,000 139,000        Total current assets 1,278,000 967,000 Long-term investments 2,350,000 2,200,000 Property, plant, and equipment (net) 1,480,000 1,188,000 Total assets 5,108,000 4,355,000 LIABILITIES Current liabilities 431,000 400,000 Long-term liabilities:     Mortgage note payable, 8%, due 2023 100,000 0     Bonds payable, 5%, due 2019 1,000,000 1,000,000        Total long-term liabilities 1,100,000 1,000,000 Total liabilities 1,531,000 1,400,000 Stockholders' Equity Preferred $0.75 stock, $10 par 200,000 200,000 Common stock, $10 par 287,000 100,000 Retained earnings 3,090,000 2,655,000        Total stockholders' equity 3,577,000 2,955,000 Total liabilities and stockholders' equity 5,108,000 4,355,000 There were 20,000 shares of preferred stock outstanding and 10,000 shares of common stock outstanding in both years. Preferred dividends during 2017 were $15,000. Additional selected information from Jonick's income statement for the year ended December 31, 2017 is as follows: Sales 1,268,000 Cost of goods sold 502,000 Gross profit 766,000 Net income 291,000 Determine the following measures for 2017, rounding to one decimal place unless otherwise indicated. 6. Ratio of sales to assets % 7. Earnings per share on common stock (to the nearest cent) $ 8. Ratio of liabilities to stockholders’ equity 9. Inventory turnover 10. Ratio of fixed assets to long-term liabilities 11. Number of days’ sales in receivables 12. Current ratio 13. Rate earned on common stockholders’ equity 14. Quick ratio Use the following comparative balance sheet and select income statement information to answer Jonick Inc. Comparative Balance Sheet December 31, 2017 and 2016 Dec. 31, 2017 Dec. 31, 2016    ASSETS Current assets:     Cash 635,000 400,000     Marketable securities 291,000 260,000     Accounts receivable (net) 135,000 110,000     Inventories 64,000 58,000     Prepaid expenses 153,000 139,000        Total current assets 1,278,000 967,000 Long-term investments 2,350,000 2,200,000 Property, plant, and equipment (net) 1,480,000 1,188,000 Total assets 5,108,000 4,355,000 LIABILITIES Current liabilities 431,000 400,000 Long-term liabilities:     Mortgage note payable, 8%, due 2023 100,000 0     Bonds payable, 5%, due 2019 1,000,000 1,000,000        Total long-term liabilities 1,100,000 1,000,000 Total liabilities 1,531,000 1,400,000 Stockholders' Equity Preferred $0.75 stock, $10 par 200,000 200,000 Common stock, $10 par 287,000 100,000 Retained earnings 3,090,000 2,655,000        Total stockholders' equity 3,577,000 2,955,000 Total liabilities and stockholders' equity 5,108,000 4,355,000 There were 20,000 shares of preferred stock outstanding and 10,000 shares of common stock outstanding in both years. Preferred dividends during 2017 were $15,000. Additional selected information from Jonick's income statement for the year ended December 31, 2017 is as follows: Sales 1,268,000 Cost of goods sold 502,000 Gross profit 766,000 Net income 291,000 Determine the following measures for 2017, rounding to one decimal place unless otherwise indicated. 6. Ratio of sales to assets % 7. Earnings per share on common stock (to the nearest cent) $ 8. Ratio of liabilities to stockholders’ equity 9. Inventory turnover 10. Ratio of fixed assets to long-term liabilities 11. Number of days’ sales in receivables 12. Current ratio 13. Rate earned on common stockholders’ equity 14. Quick ratio

Explanation / Answer

Ratio of sales to assets: Net sales / Avg total assets = 1268000/4731500 =0.2679 = 26.79%

Earnings per share on common stock: (Net income - Preferred dividends) / Outstanding common stock = (291000-15000) / 100000 = $2.76

Ratio of liabilities to stockholders’ equity: Total liabilities / Shareholders equity = 1531000 / 3577000 = 0.4280 = 42.80%

Inventory turnover: COGS / Avg inventory = 502000 / 61000 = 8.23

Ratio of fixed assets to long-term liabilities: Avg Fixed assets / Avg Long term liabilities = 105000 / 3609000 = 0.2909 = 29.09%

Number of days’ sales in receivables: (Avg Accounts recievable / Net credit sales) * 365 = (122500/1268000)*365 = 35 days

Current ratio: Current assets / Currents liabilities = 1278000 / 431000 = 2.97

Rate earned on common stockholders’ equity: Net Income / Avg Stockholder's equity = 491000 / 3266000 = 0.15

Quick ratio: (Current assets - Inventory - Prepaid exp) / Current liablities = (1278000-64000-153000) / 431000 = 2.46

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