Please help by showing how you got the answers, The comparative financial statem
ID: 2628459 • Letter: P
Question
Please help by showing how you got the answers,
The comparative financial statements of Stargel Inc. are as follows. The market price of
Stargel Inc. common stock was $119.70 on December 31, 2014.
Stargel Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2014 and 2013
2014 2013
Retained earnings, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,375,000 $4,545,000
Add net income for year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000 925,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,275,000 $5,470,000
Deduct dividends:
On preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,000 $ 45,000
On common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 50,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,000 $ 95,000
Retained earnings, December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,180,000 $5,375,000
Stargel Inc.
Comparative Income Statement
For the Years Ended December 31, 2014 and 2013
2014 2013
Sales (all on account) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,050,000 $9,450,000
Sales returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 50,000
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000,000 $9,400,000
Cost of goods sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,350,000 4,950,000
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,650,000 $4,450,000
Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000,000 $1,880,000
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 1,410,000
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,500,000 $3,290,000
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,150,000 $1,160,000
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 140,000
$ 1,300,000 $1,300,000
Other expense (interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000 150,000
Income before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,130,000 $1,150,000
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,000 225,000
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 900,000 $ 925,000
Stargel Inc.
Comparative Balance Sheet
December 31, 2014 and 2013
Dec. 31, 2014 Dec. 31, 2013
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500,000 $ 400,000
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,010,000 1,000,000
Accounts receivable (net). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 740,000 510,000
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,190,000 950,000
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 229,000
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,690,000 $3,089,000
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,350,000 2,300,000
Property, plant, and equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,740,000 3,366,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,780,000 $8,755,000
Liabilities
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 900,000 $ 880,000
Long-term liabilities:
Mortgage note payable, 8%, due 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,000 $ 0
Bonds payable, 10%, due 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 1,500,000
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,700,000 $1,500,000
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,600,000 $2,380,000
Stockholders
Explanation / Answer
Formula view
1. Working capital $ 2,790,000 2. Current ratio 4.1 times 3. Quick ratio 2.5 times 4. Accounts receivable turnover 16 times 5. Number of days sales in receivables 22.8125 days 6. Inventory turnover 5 times 7. Number of days sales in inventory 73.0 days 8. Ratio of fixed assets to long-term liabilities 3.6 times 9. Ratio of liabilities to stockholders equity 36.2% 10. Number of times interest charges earned 7.7 times 11. Number of times preferred dividends earned 20.0 times 12. Ratio of net sales to assets 107.9% 13. Rate earned on total assets 9.7% 14. Rate earned on stockholders equity 12.5% 15. Rate earned on common stockholders equity 13.6% 16. Earnings per share on common stock $ 1.7 17. Price-earnings ratio 23.4 times 18. Dividends per share of common stock $ 0.10 19. Dividend yield 0.25%Related Questions
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