ACCTG 211 Lecture Notes - Lecture 13: Net Income
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Quantitative Reasoning Problem 2
ACC 122
Assignment is to be completed as a Word Document, PDF, or on notebook paper and submitted through Moodle
The table below contains letters a, b, c, d.
2018 | 2017 | |
Average common stockholder equity | $1,800,000 | $1,900,000 |
Dividends paid to common shareholders | 90,000 | 70,000 |
Dividends paid to preferred shareholders | 20,000 | 20,000 |
Net Income | 290,000 | 248,000 |
Market Price of common stock | $20 | $25 |
Weighted average number of shares common stock outstanding | 150,000 | 180,000 |
Earnings per share | (a) | (b) |
Return on common stockholders equity | (c) | (d) |
Tell what these formulas are used for : Earnings per share; Return on common stockholder equity
Show all your computations or calculations for each of the letters (a), (b), (c ) (d)
Provide a sentence of explanation for each answer telling why you did what you did
Quantitative Reasoning Problem 2
ACC 122
Assignment is to be completed as a Word Document, PDF, or on notebook paper and submitted through Moodle
The table below contains letters a, b, c, d.
2018 | 2017 | |
Average common stockholder equity | $1,800,000 | $1,900,000 |
Dividends paid to common shareholders | 90,000 | 70,000 |
Dividends paid to preferred shareholders | 20,000 | 20,000 |
Net Income | 290,000 | 248,000 |
Market Price of common stock | $20 | $25 |
Weighted average number of shares common stock outstanding | 150,000 | 180,000 |
Earnings per share | (a) | (b) |
Return on common stockholders equity | (c) | (d) |
Tell what these formulas are used for : Earnings per share; Return on common stockholder equity
Show all your computations or calculations for each of the letters (a), (b), (c ) (d)
Provide a sentence of explanation for each answer telling why you did what you did
Based on the financial information provided, calculate thefollowing ratios and explain their purpose:
Current Ratio
Inventory Turnover Ratio
Accounts Receivable Turnover Ratio Debt to Equity Ratio
Return on Assets Ratio
Asset Turnover Ratio
Return on Equity Ratio
Profit Margin Ratio
Price-Earnings Ratio
Dividend Yield Ratio
Note: When a balance sheet amount is related toan income statement amount in computing a ratio, the balance sheetamount should be an average of that period. The average iscalculated by adding the ending balances of this year and last yearand dividing the result by 2. Describe how a bank lending officermight use ratio analysis. Select five ratios that would be mostuseful for the purpose and explain the rationale for yourselection.
12/31/10 | 12/31/09 | |
Amount in Dollars | Amount in Dollars | |
Cash | 200.00 | 150.00 |
Receivables | 500.00 | 350.00 |
Inventories | 750.00 | 755.00 |
Other Current Assets | 100.00 | 75.00 |
Total Current Assets | 1,550.00 | 1,330.00 |
Plant and Equipment | 1,100.00 | 1,170.00 |
Other Long - Term Assets | 150.00 | 100.00 |
Total Assets | 2,800.00 | 2,600.00 |
Accounts Payable | 510.00 | 400.00 |
Other Current Liabilities | 25.00 | 25.00 |
Total Current Liabilities | 535.00 | 425.00 |
Long Term Debt | 375.00 | 400.00 |
Other Long Term Liabilities | 225.00 | 175.00 |
Preferred Stock | 250.00 | 250.00 |
Shareholders' Equity | 1,415.00 | 1,350.00 |
Total Liabilities and Shareholders' Equity | 2,800.00 | 2,600.00 |
Year-2010 | Year-2009 | |
Amount in Dollars | ||
Net Sales | 3500.00 | 3200.00 |
Cost of Goods Sold | 2200.00 | 2100.00 |
Other Expenses | 300.00 | 250.00 |
Depreciation | 77.00 | 62.00 |
Interest Expenses | 40.00 | 46.00 |
Tax | 200.00 | 150.00 |
Net Income | 683.00 | 592.00 |
Preferred Stock Dividend | 25.00 | |
Common Stock Dividends | 260.00 | |
Market Value of Equity | 4000.00 | |
Average Number of Shares | 100.00 | |
Share Price | 40.00 | |
Dividends per Share | 2.60 | |
Earnings per Share | 6.58 |