Ratios
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The net income reported on an income statement for the current year was $55,000. Depreciation recorded on fixed assets for the year was $24,000. Balances of the current asset and current liability accounts at the end and beginning of the year are listed below. Prepare the cash flows from operating activities section of a statement of cash flows using the indirect method.
End Beginning
Cash $ 65,000 $ 70,000
Accounts receivable (net) 70,000 63,000
Inventories 85,000 102,000
Prepaid expenses 4,000 4,500
Account payable
(merchandise creditors) 50,000 58,000
Cash dividends payable 4,500 6,500
Salaries payable 6,000 7,500
COMPANY X
STATEMENT OF CASH FLOW
12-31-08
MORTON CO. BALANCE SHEET
ASSETS
Cash $ 126,100
Marketable Securities 117,500
Account Receivable 456,700
Inventories 1,880,000
Prepaid Expenses 72,600
Equipment 5,352,200
Land 217,000
Total Assets $ 8,212,100
LIABILITIES AND STOCKHOLDERS EQUITY
Account Payable $ 517,400
Notes Payable 1,000,000
Income Tax Payable 85,200
Bonds Payable 2,000,000
Common Stock - $1 par 1,747,300
Retained Earnings 2,512,200
Total $ 8,212,100
During the year, Morton paid a total of $140,000 in dividends, and its current market price per share is $20. Assume that all notes payable are current liabilities and that all bonds payable are long-term liabilities. Also inventories and receivables remained constant. Sales were $6,580,000, cost of sales was $4,606,000, gross profit was $1,974,000 and Net income was $168,000.
INSTRUCTIONS: Compute the analytical measures listed below, rounding to one decimal point. & show work.
1. Quick Ratio
2. Current Ratio
3. Inventory Turnover
4. Accounts Receivable turnover
5. Earnings per share on common stock
6. Price-earnings ratio on common stock
7. Dividend yield on common stock
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The solution explains the calculation of some ratios
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