Compute the specified ratios using Hilda Companyââ¬â¢s balance sheet at December 31, 2011.
Assets
Cash $14,000
Marketable securities 9,000
Accounts receivable 14,000
Inventory 10,000
Property and equipment 175,000
Accumulated depreciation (13,000)
Total assets $209,000
Equities
Accounts payable $10000
Current notes payable 4,000
Mortgage payable 5,000
Bonds payable 21,500
Common stock 63500
Retained earnings 209,000
Total liabilities and stockholdersââ¬â¢ equity $209,000
The average number of common stock shares outstanding during 2011 was 850 shares. Net income for the year was $13,000.
Required
Compute each of the following:
(a) Current ratio. (Round your answer to 2 decimal places.)
Current ratio ? : 1
(b)
Earnings per share. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Earnings per share $? per share
(c) Quick (acid-test) ratio. (Round your answer to 2 decimal places.)
Quick (acid-test) ratio ?: 1
(d)
Return on investment. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Return on investment ?%
(e) Return on equity. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Return on equity ?%
(f) Debt to equity ratio. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Debt to equity ratio ?%
Compute the specified ratios using Hilda Companyââ¬â¢s balance sheet at December 31, 2011.
Assets
Cash $14,000
Marketable securities 9,000
Accounts receivable 14,000
Inventory 10,000
Property and equipment 175,000
Accumulated depreciation (13,000)
Total assets $209,000
Equities
Accounts payable $10000
Current notes payable 4,000
Mortgage payable 5,000
Bonds payable 21,500
Common stock 63500
Retained earnings 209,000
Total liabilities and stockholdersââ¬â¢ equity $209,000
The average number of common stock shares outstanding during 2011 was 850 shares. Net income for the year was $13,000.
Required
Compute each of the following:
(a) Current ratio. (Round your answer to 2 decimal places.)
Current ratio ? : 1
(b)
Earnings per share. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Earnings per share $? per share
(c) Quick (acid-test) ratio. (Round your answer to 2 decimal places.)
Quick (acid-test) ratio ?: 1
(d)
Return on investment. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Return on investment ?%
(e) Return on equity. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Return on equity ?%
(f) Debt to equity ratio. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Debt to equity ratio ?%
Related textbook solutions
Related questions
Problem 3-14
Comprehensive Ratio Analysis
The Jimenez Corporation's forecasted 2014 financial statements follow, along with some industry average ratios.
Jimenez Corporation: Forecasted Balance Sheet as of December 31, 2014
| Assets | |
| Cash | $ 72,000 |
| Accounts receivable | 439,000 |
| Inventories | 894,000 |
| Total current assets | $1,405,000 |
| Fixed assets | 431,000 |
| Total assets | $1,836,000 |
| Liabilities and Equity | |
| Accounts payable | $ 332,000 |
| Notes payable | 100,000 |
| Accruals | 170,000 |
| Total current liabilities | $ 602,000 |
| Long-term debt | 404,290 |
| Common stock | 575,000 |
| Retained earnings | 254,710 |
| Total liabilities and equity | $1,836,000 |
Jimenez Corporation: Forecasted Income Statement for 2014
| Sales | $4,290,000 |
| Cost of goods sold | 3,580,000 |
| Selling, general, and administrative expenses | 370,320 |
| Depreciation and amortization | 159,000 |
| Earnings before taxes (EBT) | $ 180,680 |
| Taxes (40%) | 72,272 |
| Net income | $ 108,408 |
| Per Share Data | |
| EPS | $ 4.71 |
| Cash dividends per share | $ 0.95 |
| P/E ratio of | 5.0 |
| Market price (average) | $ 23.57 |
| Number of shares outstanding | 23,000 |
| Industry Financial Ratios (2013)* | |
| The quick ratio of | 1.0 |
| The current ratio of | 2.7 |
| Inventory turnover** | 7.0 |
| Days sales outstanding*** | 32.0 days |
| Fixed assets turn over** | 13.0 |
| Total assets turnover** | 2.6 |
| Return on assets | 9.1% |
| Return on equity | 18.2% |
| The profit margin on aales of | 3.5% |
| Debt-to-assets ratio | 21.0% |
| Liabilities-to-assets ratio | 50.0% |
| P/E ratio of | 6.0 |
| Price/Cash flow ratio of | 3.5 |
| Market/Book ratio of | 3.5 |
| *Industry average ratios have been constant for the past 4 years. | |
| **Based on year-end balance sheet figures. | |
| ***Calculation is based on a 365-day year. | |
Calculate Jimenez's 2014 forecasted ratios, compare them with the industry average data, and comment briefly on Jimenez's projected strengths and weaknesses. Assume that there are no changes from the prior period to any of the operating balance sheet accounts. Round DSO to the nearest whole number. Round the other ratios to one decimal place.
| Ratios | Firm | Industry | Comment |
| Quick ratio | 1.0 | -Select-Strong Weak Item 2 | |
| Current ratio | 2.7 | -Select-Strong Weak Item 4 | |
| Inventory turnover | 7.0 | -Select-Poor Rich Item 6 | |
| Days sales outstanding | days | 32 days | -Select-Poor Rich Item 8 |
| Fixed assets turnover | 13.0 | -Select-Poor Rich Item 10 | |
| Total assets turnover | 2.6 | -Select-Poor Rich Item 12 | |
| Return on assets | % | 9.1% | -Select-Bad Good Item 14 |
| Return on equity | % | 18.2% | -Select-Bad Good Item 16 |
| The profit margin on sales | % | 3.5% | -Select-Bad Good Item 18 |
| Debt ratio | % | 21.0% | -Select-Low High item 20 |
| Liabilities-to-assets | % | 50.0% | -Select-Low High Item 22 |
| EPS | $4.71 | n.a. | -- |
| Stock Price | $23.57 | n.a. | -- |
| P/E ratio | 6.0 | -Select-PoorRich Item 24 | |
| P/CF ratio | 3.5 | -Select-PoorRich Item 26 | |
| M/B ratio | n.a. | -- |
So, the firm appears to be -Select-badly good item 28 managed
