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Financial Ratio Analysis for Davis, Inc.

See Davis Inc. document attached.

The financial statements of Davis Inc. appear below:
DAVIS, INC.
Comparative Balance Sheet
December 31,
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Assets 2012 2011
Cash ........................................................................................................................ $50,000 $45,000
Short-term investments ......................................................................................... 35,000 55,000
Accounts receivable (net) ....................................................................................... 40,000 30,000
Inventory ................................................................................................................ 60,000 80,000
Property, plant and equipment (net) ..................................................................... 275,000 290,000
Total assets ..................................................................................................... $460,000 500,000

Liabilities and stockholders' equity
Accounts payable ................................................................................................... $20,000 $35,000
Short-term notes payable ...................................................................................... 35,000 70,000
Bonds payable ........................................................................................................ 120,000 140,000
Common stock ....................................................................................................... 150,000 150,000
Retained earnings .................................................................................................. 135,000 105,000
Total liabilities and stockholders' equity ......................................................... $460,000 $500,000

DAVIS, INC.
Income Statement
For the Year Ended December 31, 2012
Net sales ................................................................................................................. $500,000
Cost of goods sold .................................................................................................. 280,000
Gross profit............................................................................................................. 220,000
Expenses
Operating expenses ........................................................................................ $122,000
Interest expense ............................................................................................. 13,000
Total expenses ......................................................................................... 135,000
Income before income taxes .................................................................................. 85,000
Income tax expense ............................................................................................... 25,000
Net income ............................................................................................................. $ 60,000

Additional information:
a. Cash dividends of $30,000 were declared and paid in 2012.
b. Weighted-average number of shares of common stock outstanding during 2012 was 25,000 shares.
c. Market value of common stock on December 31, 2012, was $20 per share.

Instructions
Using the financial statements and additional information, compute the following ratios for Davis, Inc. for 2011. You must show supporting computations to receive full credit.

1. Current ratio
2. Return on common stockholders' equity
3. Price-earnings ratio
4. Acid-test ratio
5. Receivables turnover
6. Times interest earned
7. Days in inventory
8. Return on assets

Attachments

Solution Summary

The attached MS Excel spreadsheet contains a detailed financial ratio analysis for Davis, Incorporated based on data from the company's income statement and balance sheet.

$2.19