The comparative financial statements of Bettancort Inc. are as follows. The market price of Bettancort Inc. common stock was $71.25 on December 31, 2016.
Bettancort Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2016 and 2015
2016
2015
Retained earnings, January 1
$2,655,000
$2,400,000
Add net income for year
300,000
280,000
Total
$2,955,000
$2,680,000
Deduct dividends:
On preferred stock
$15,000
$15,000
On common stock
10,000
10,000
Total
$25,000
$25,000
Retained earnings, December 31
$2,930,000
$2,655,000
Bettancort Inc.
Comparative Income Statement
For the Years Ended December 31, 2016 and 2015
2016
2015
Sales (all on account)
$1,212,000
$1,010,000
Sales returns and allowances
12,000
10,000
Sales
$1,200,000
$1,000,000
Cost of goods sold
500,000
475,000
Gross profit
$700,000
$525,000
Selling expenses
$240,000
$200,000
Administrative expenses
180,000
150,000
Total operating expenses
$420,000
$350,000
Income from operations
$280,000
$175,000
Other income
166,000
225,000
$446,000
$400,000
Other expense (interest)
66,000
60,000
Income before income tax
$380,000
$340,000
Income tax expense
80,000
60,000
Net income
$300,000
$280,000
Bettancort Inc.
Comparative Balance Sheet
December 31, 2016 and 2015
Dec. 31, 2016
Dec. 31, 2015
Assets
Current assets:
Cash
$450,000
$400,000
Marketable securities
300,000
260,000
Accounts receivable (net)
130,000
110,000
Inventories
67,000
58,000
Prepaid expenses
153,000
139,000
Total current assets
$1,100,000
$967,000
Long-term investments
2,350,000
2,200,000
Property, plant, and equipment (net)
1,320,000
1,188,000
Total assets
$4,770,000
$4,355,000
Liabilities
Current liabilities
$440,000
$400,000
Long-term liabilities:
Mortgage note payable, 8%, due 2021
$100,000
$0
Bonds payable, 5%, due 2017
1,000,000
1,000,000
Total long-term liabilities
$1,100,000
$1,000,000
Total liabilities
$1,540,000
$1,400,000
Stockholders' Equity
Preferred $0.75 stock, $10 par
$200,000
$200,000
Common stock, $10 par
100,000
100,000
Retained earnings
2,930,000
2,655,000
Total stockholders' equity
$3,230,000
$2,955,000
Total liabilities and stockholders' equity
$4,770,000
$4,355,000
Required:
Determine the following measures for 2016, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.
5. Number of days' sales in receivables
days
6. Inventory turnover
7. Number of days' sales in inventory
days
8. Ratio of fixed assets to long-term liabilities
9. Ratio of liabilities to stockholders' equity
10. Number of times interest charges are earned
11. Number of times preferred dividends are earned
12. Ratio of sales to assets
13. Rate earned on total assets
%
14. Rate earned on stockholders' equity
%
15. Rate earned on common stockholders' equity
%
16. Earnings per share on common stock
$
17. Price-earnings ratio
18. Dividends per share of common stock
$
19. Dividend yield
%
The comparative financial statements of Bettancort Inc. are as follows. The market price of Bettancort Inc. common stock was $71.25 on December 31, 2016.
Bettancort Inc. | ||||||
Comparative Retained Earnings Statement | ||||||
For the Years Ended December 31, 2016 and 2015 | ||||||
2016 | 2015 | |||||
Retained earnings, January 1 | $2,655,000 | $2,400,000 | ||||
Add net income for year | 300,000 | 280,000 | ||||
Total | $2,955,000 | $2,680,000 | ||||
Deduct dividends: | ||||||
On preferred stock | $15,000 | $15,000 | ||||
On common stock | 10,000 | 10,000 | ||||
Total | $25,000 | $25,000 | ||||
Retained earnings, December 31 | $2,930,000 | $2,655,000 | ||||
Bettancort Inc. | ||||
Comparative Income Statement | ||||
For the Years Ended December 31, 2016 and 2015 | ||||
2016 | 2015 | |||
Sales (all on account) | $1,212,000 | $1,010,000 | ||
Sales returns and allowances | 12,000 | 10,000 | ||
Sales | $1,200,000 | $1,000,000 | ||
Cost of goods sold | 500,000 | 475,000 | ||
Gross profit | $700,000 | $525,000 | ||
Selling expenses | $240,000 | $200,000 | ||
Administrative expenses | 180,000 | 150,000 | ||
Total operating expenses | $420,000 | $350,000 | ||
Income from operations | $280,000 | $175,000 | ||
Other income | 166,000 | 225,000 | ||
$446,000 | $400,000 | |||
Other expense (interest) | 66,000 | 60,000 | ||
Income before income tax | $380,000 | $340,000 | ||
Income tax expense | 80,000 | 60,000 | ||
Net income | $300,000 | $280,000 |
Bettancort Inc. | |||||||
Comparative Balance Sheet | |||||||
December 31, 2016 and 2015 | |||||||
Dec. 31, 2016 | Dec. 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $450,000 | $400,000 | |||||
Marketable securities | 300,000 | 260,000 | |||||
Accounts receivable (net) | 130,000 | 110,000 | |||||
Inventories | 67,000 | 58,000 | |||||
Prepaid expenses | 153,000 | 139,000 | |||||
Total current assets | $1,100,000 | $967,000 | |||||
Long-term investments | 2,350,000 | 2,200,000 | |||||
Property, plant, and equipment (net) | 1,320,000 | 1,188,000 | |||||
Total assets | $4,770,000 | $4,355,000 | |||||
Liabilities | |||||||
Current liabilities | $440,000 | $400,000 | |||||
Long-term liabilities: | |||||||
Mortgage note payable, 8%, due 2021 | $100,000 | $0 | |||||
Bonds payable, 5%, due 2017 | 1,000,000 | 1,000,000 | |||||
Total long-term liabilities | $1,100,000 | $1,000,000 | |||||
Total liabilities | $1,540,000 | $1,400,000 | |||||
Stockholders' Equity | |||||||
Preferred $0.75 stock, $10 par | $200,000 | $200,000 | |||||
Common stock, $10 par | 100,000 | 100,000 | |||||
Retained earnings | 2,930,000 | 2,655,000 | |||||
Total stockholders' equity | $3,230,000 | $2,955,000 | |||||
Total liabilities and stockholders' equity | $4,770,000 | $4,355,000 |
Required:
Determine the following measures for 2016, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.
5. Number of days' sales in receivables | days | |
6. Inventory turnover | ||
7. Number of days' sales in inventory | days | |
8. Ratio of fixed assets to long-term liabilities | ||
9. Ratio of liabilities to stockholders' equity | ||
10. Number of times interest charges are earned | ||
11. Number of times preferred dividends are earned | ||
12. Ratio of sales to assets | ||
13. Rate earned on total assets | % | |
14. Rate earned on stockholders' equity | % | |
15. Rate earned on common stockholders' equity | % | |
16. Earnings per share on common stock | $ | |
17. Price-earnings ratio | ||
18. Dividends per share of common stock | $ | |
19. Dividend yield | % |