Explore BrainMass

Explore BrainMass

    Financial Ratios Calculations

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    P13-2A

    The Comparative statements of Jack Frost Company are presented here.

    Jack Frost Company
    Income Statement
    For the year ended December 31

    2007 2008

    Net Sales $1,890,540 1,750,500
    Cost of Goods sold 1,058,540 996,000

    Gross Profit 832,000 754,500
    Selling & admin. Exp. 506,000 275,500

    Income from operations 326,000 275,500
    Other expenses and losses
    Interest expense 25,000 19,000

    Income before income taxes 301,000 256,500
    Income tax expense 86,000 77,000

    Net Income 215,000 179,500

    Jack Frost
    Balance Sheet
    December 31

    Assets 2007 2008

    Current assets
    Cash 60,100 64,200
    Short term Inv 74,000 50,000
    Accounts Receivable 107,800 102,800
    Inventory 133,000 115,500
    Total Current Assets 374,900 332,500

    Liabilities and Stockholders Equity
    Current Liabilities
    Accounts payable 160,000 145,400
    Income tax payable 43,500 42,000
    Total current Liabilities 203,500 187,400
    Bonds payable 210,000 200,000
    Total Liabilities 413,500 387,400
    Stockholders Equity
    Common Stock ($5 per share) 290,000 300,000
    Retained earnings 286,000 165,400
    Total Stockholders equity 576,000 465,400

    Total Liabilities and 990,200 852,000
    Stockholders equity

    All sales were on account. Net cash provided by operating activities for 2007 was $240,000. Capital expenditures were $120,000 and cash dividends were $80,000.
    Complete the following ratios for 2007:

    A) Earnings per share H) Days in Inventory
    B) Return on common stockholders equity I) Times interest earned
    C) Return on assets J) Assets turnover
    D) Current ratio K) Debt to total assets
    E) Receivable turnover L) Current cash debt coverage
    F) Average collection period M) Cash debt coverage
    G) Inventory turnover N) Free cash flow

    © BrainMass Inc. brainmass.com June 3, 2020, 10:50 pm ad1c9bdddf
    https://brainmass.com/business/finance/financial-ratios-calculations-252313

    Attachments

    Solution Preview

    A. EPS = Net income/Weighted average common shares
    Note: Net income is in income statement and common shares amount is the common stock amount in the balance sheet.
    2007: 215,000/290,000 = $0.74 per share
    B. Return on common stockholder's equity or ROE = Net income/Average stockholder's equity
    Note: Net income is in income statement and Stockholder's equity is the amount below retained earnings in the ...

    Solution Summary

    This solution is comprised of step-by-step calculation of financial ratios.

    $2.19

    ADVERTISEMENT