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3. Espinola Corporation's most recent balance shee...

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3. Espinola Corporation's most recent balance sheet and income statement appear below: BALANCE SHEETS 2006 2005 ASSETS Cash & equivalents $320,000 $180,000 Accounta receivable 220,000 240,000 Inventory 140,000 130,000 Prepaid expenses 20,000 20,000 Total current assets 700,000 570,000 Plant & equipment, net 860,000 920,000 Total Assets $1,560,000 $1,490,000 LIABILITIES & EQUITIES Accounts payable $200,000 $170,000 Accrued payable 80,000 80,000 Notes payable, current 40,000 40,000 Total current liabilities 320,000 290,000 Bonds payable 210,000 220,000 Total liabilities 530,000 510,000 Preferred stock, $100 par value, 5% 100,000 100,000 Common stock, $1 par value 100,000 100,000 Additional paid in capital, common stock 150,000 150,000 Retained earnings 680,000 630,000 Total equities 1,030,000 980,000 Total liabilities & equities $1,560,000 $1,490,000 INCOME STATEMENT 2006 Sales $1,220,000 Cost of goods sold 790,000 Gross margin 430,000 Selling & Admin expense 268,000 Net operating income 162,000 Interest expense 26,000 Income before tax 136,000 Income tax 41,000 Net income 95,000 Dividends paid, preferred 5,000 Net income for common shareholders 90,000 Dividends paid, common 40,000 Net income added to retained earnings 50,000 Beginning retained earnings 630,000 Ending retained earnings $680,000 Other: Market value of stock end of year $12.87 Tax rate 30% Bond interest 10% Return demanded on preferred stock 10% Return demanded on common stock 14% Required compute the following for 2006 : a. Gross margin percentage. b. Earnings per share (of common stock). c. Price-earnings ratio. d. Dividend payout ratio. dividend per share dividend payout ratio e. Dividend yield ratio. f. Return on total assets. after tax cost of interest average total assets return on total assets g. Return on common stockholders' equity. average stockholders equity average preferred stock return on equity h. Book value per share. i. Working capital. j. Current ratio. k. Acid-test ratio. l. Accounts receivable turnover. m. Average collection period (days). n. Inventory turnover. o. Average sale period (days). p. Times interest earned. q. Debt-to-equity ratio. r. Show that financial leverage is positive or negative.

 

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