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ACCOUNTING - Ex 17-2, 17-4

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Question;Exercise 17-12 Profitability analysis L.O. P3Sanderson Company?s year-end balance sheets follow.At December 31 2012 2011 2010AssetsCash $ 30,501 $ 35,307 $ 36,403Accounts receivable, net 86,685 59,970 47,595Merchandise inventory 105,753 77,645 51,708Prepaid expenses 9,727 8,905 3,888Plant assets, net 269,247 250,857 217,406Total assets $ 501,913 $ 432,684 $ 357,000Liabilities and EquityAccounts payable $ 127,476 $ 74,586 $ 47,124Long-term notes payable secured bymortgages on plant assets 94,360 98,522 79,686Common stock, $10 par value 162,500 162,500 162,500Retained earnings 117,577 97,076 67,690Total liabilities and equity $ 501,913 $ 432,684 $ 357,000The company?s income statements for the years ended December 31, 2012 and 2011, follow.For Year Ended December 31 2012 2011Sales $ 652,487 $ 514,894Cost of goods sold $ 398,017 $ 334,681Other operating expenses 202,271 130,268Interest expense 11,092 11,843Income taxes 8,482 7,723Total costs and expenses 619,862 484,515Net income $ 32,625 $ 30,379Earnings per share $ 2.01 $ 1.87Additional information about the company follows.Common stock market price, December 31, 2012 $30.00Common stock market price, December 31, 2011 28.00Annual cash dividends per share in 2012 0.32Annual cash dividends per share in 2011 0.16To help evaluate the company's profitability, compute the following ratios for 2012 and 2011:(1) Return on common stockholders' equity. (Do not round intermediate calculations and round your final answers to 1 decimal place. Omit the "%" sign in your response.)Return on common shareholders equity2012 11 %(2) Price-earnings ratio on December 31. (Round your answers to 1 decimal place.)Price-earnings ratio20122011(3) Dividend yield. (Round your answers to 1 decimal place. Omit the "%" sign in your response.)Dividend Yield2012 11 %Problem 17-4A Calculation of financial statement ratios L.O. P3Selected year-end financial statements of McCord Corporation follow. (All sales were on credit, selected balance sheet amounts at December 31, 2010, were inventory, $50,900, total assets, $259,400, common stock, $90,000, and retained earnings, $52,348.)McCORD CORPORATIONIncome StatementFor Year Ended December 31, 2011Sales $ 454,600Cost of goods sold 297,450Gross profit 157,150Operating expenses 98,800Interest expense 4,300Income before taxes 54,050Income taxes 21,774Net income $ 32,276McCORD CORPORATIONBalance SheetDecember 31, 2011Assets Liabilities and EquityCash $ 12,000 Accounts payable $ 23,500Short-term investments 9,200 Accrued wages payable 4,000Accounts receivable, net 30,000 Income taxes payable 3,700Notes receivable (trade)* 5,500 Long-term note payable, securedMerchandise inventory 34,150 by mortgage on plant assets 72,400Prepaid expenses 2,500 Common stock 90,000Plant assets, net 147,300 Retained earnings 47,050Total assets $ 240,650 Total liabilities and equity $ 240,650* These are short-term notes receivable arising from customer (trade) sales.Required:Compute the following. (Use 365 days a year. Do not round intermediate calculations and round your final answers to 1 decimal place. Omit the "%" sign in your response):(1) Current ratio to(2) Acid-test ratio to(3) Days' sales uncollected (including note) days(4) Inventory turnover times(5) Days' sales in inventory days(6) Debt-to-equity ratio to(7) Times interest earned times(8) Profit margin ratio %(9) Total asset turnover times(10) Return on total assets %(11) Return on common stockholders' equity %

 

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