Comparative financial statement data of Tanfield, Inc., follow: Tanfield, Inc. C
ID: 2593557 • Letter: C
Question
Comparative financial statement data of Tanfield, Inc., follow:
Tanfield, Inc.
Comparative Income Statement
Years Ended December 31, 2011 and 2010
2011
2010
Net sales
$465,000
$426,000
Cost of goods sold
237,000
214,000
Gross profit
228,000
212,000
Operating expenses
135,000
133,000
Income from operations
93,000
79,000
Interest expense
9,000
12,000
Income before income tax
84,000
67,000
Income tax expense
21,000
23,000
Net income
$63,000
$44,000
Tanfield, Inc.
Comparative Balance Sheet
December 31, 2011 and 2010
2011
2010
2009*
Current assets:
Cash
$94,000
$91,000
Current receivables, net
107,000
117,000
$102,000
Inventories
144,000
161,000
201,000
Prepaid expenses
15,000
8,000
Total current assets
360,000
377,000
Property, plant, and equipment, net
216,000
173,000
Total assets
$576,000
$550,000
599,000
Total current liabilities
$226,000
$243,000
Long-term liabilities
117,000
95,000
Total liabilities
343,000
338,000
Preferred stock, 3%
92,000
92,000
Common stockholders' equity, no par
141,000
120,000
85,000
Total liabilities and stockholders' equity
$576,000
$550,000
* Selected 2009 amounts
1.
$108.36 at December 31, 2011, and
$61.92 at December 31, 2010.
2.
10,000 during 2011 and
8,000 during 2010.
3.
All sales on credit.
Requirements
1. Compute the following ratios for 2011 and 2010:
a.
Current ratio
b.
Times-interest-earned ratio
c.
Inventory turnover
d.
Return on common stockholders' equity
e.
Earnings per share of common stock
f.
Price/earnings ratio
2.
Tanfield's
Tanfield, Inc.
Comparative Income Statement
Years Ended December 31, 2011 and 2010
2011
2010
Net sales
$465,000
$426,000
Cost of goods sold
237,000
214,000
Gross profit
228,000
212,000
Operating expenses
135,000
133,000
Income from operations
93,000
79,000
Interest expense
9,000
12,000
Income before income tax
84,000
67,000
Income tax expense
21,000
23,000
Net income
$63,000
$44,000
Explanation / Answer
2010 2011 a Current ratio 1.55 1.59 b Times-interest-earned ratio 6.58 10.33 c Inventory turnover 1.18 1.55 d Return on common stockholders' equity 36.67 44.68 e Earnings per share of common stock 5.5 6.3 f Price/earnings ratio 11.26 17.20 a Current Ratio 377000/243000 360000/226000 Current assets / Current liabilities 1.55 1.59 b Time Interest earned 79000/12000 93000/9000 Operating Profit before interest / Interest 6.58 10.33 c Inventory Turnover 214000/(201000+161000)/2 237000/(144000+161000)/2 Cost of Goods Sold / Avg Inventory 1.18 1.55 d Return on common stockholders' equity 44000/120000 63000/141000 Net Income / Common Stock holders Equity 36.67 44.68 e Earnings per share of common stock 44000/8000 63000/10000 Net Income / Number of Shares Outstanding 5.5 6.3 f Price/earnings ratio 61.92/5.5 108.36/6.3 Market Value per Share / Earnings per Share 11.26 17.2
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