Please help by showing how you got the answers,
The comparative financial statements of Stargel Inc. are as follows. The market price of
Stargel Inc. common stock was $119.70 on December 31, 2014.
Stargel Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2014 and 2013
2014 2013
Retained earnings, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,375,000 $4,545,000
Add net income for year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000 925,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,275,000 $5,470,000
Deduct dividends:
On preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,000 $ 45,000
On common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 50,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,000 $ 95,000
Retained earnings, December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,180,000 $5,375,000
Stargel Inc.
Comparative Income Statement
For the Years Ended December 31, 2014 and 2013
2014 2013
Sales (all on account) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,050,000 $9,450,000
Sales returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 50,000
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000,000 $9,400,000
Cost of goods sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,350,000 4,950,000
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,650,000 $4,450,000
Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000,000 $1,880,000
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 1,410,000
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,500,000 $3,290,000
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,150,000 $1,160,000
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 140,000
$ 1,300,000 $1,300,000
Other expense (interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000 150,000
Income before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,130,000 $1,150,000
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,000 225,000
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 900,000 $ 925,000
Stargel Inc.
Comparative Balance Sheet
December 31, 2014 and 2013
Dec. 31, 2014 Dec. 31, 2013
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500,000 $ 400,000
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,010,000 1,000,000
Accounts receivable (net). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 740,000 510,000
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,190,000 950,000
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 229,000
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,690,000 $3,089,000
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,350,000 2,300,000
Property, plant, and equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,740,000 3,366,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,780,000 $8,755,000
Liabilities
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 900,000 $ 880,000
Long-term liabilities:
Mortgage note payable, 8%, due 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,000 $ 0
Bonds payable, 10%, due 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 1,500,000
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,700,000 $1,500,000
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,600,000 $2,380,000
Stockholders
Please help by showing how you got the answers,
The comparative financial statements of Stargel Inc. are as follows. The market price of
Stargel Inc. common stock was $119.70 on December 31, 2014.
Stargel Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2014 and 2013
2014 2013
Retained earnings, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,375,000 $4,545,000
Add net income for year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000 925,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,275,000 $5,470,000
Deduct dividends:
On preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 45,000 $ 45,000
On common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 50,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,000 $ 95,000
Retained earnings, December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,180,000 $5,375,000
Stargel Inc.
Comparative Income Statement
For the Years Ended December 31, 2014 and 2013
2014 2013
Sales (all on account) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,050,000 $9,450,000
Sales returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 50,000
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000,000 $9,400,000
Cost of goods sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,350,000 4,950,000
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,650,000 $4,450,000
Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000,000 $1,880,000
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 1,410,000
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,500,000 $3,290,000
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,150,000 $1,160,000
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 140,000
$ 1,300,000 $1,300,000
Other expense (interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000 150,000
Income before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,130,000 $1,150,000
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,000 225,000
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 900,000 $ 925,000
Stargel Inc.
Comparative Balance Sheet
December 31, 2014 and 2013
Dec. 31, 2014 Dec. 31, 2013
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500,000 $ 400,000
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,010,000 1,000,000
Accounts receivable (net). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 740,000 510,000
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,190,000 950,000
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 229,000
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,690,000 $3,089,000
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,350,000 2,300,000
Property, plant, and equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,740,000 3,366,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,780,000 $8,755,000
Liabilities
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 900,000 $ 880,000
Long-term liabilities:
Mortgage note payable, 8%, due 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,000 $ 0
Bonds payable, 10%, due 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000 1,500,000
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,700,000 $1,500,000
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,600,000 $2,380,000
Stockholders
Related questions
Star Industries Inc comparative financial statements for the years ending December 31, 2010 and 2009, are as follows. The market price for Star Industries common stock was $ 20 on December 31, 2009, and $ 32 on December 31, 2010. Common stock shares outstanding for both 2010 and 2009 are 70000 shares (Ie $ 700,000 / $ 10 par)
Star Industries
Comparative Income Statement
For the Years Ended December 31, 2010 and 2009
| 2010 | 2009 | ||
| Sales | $7,000,000 | $5,670,000 | |
| Sales returns and allowances | $325,000 | $175,000 | |
| Net Sales | $6,675,000 | $5,495,000 | |
| Cost of Goods Sold | $4,850,000 | $3,950,000 | |
| Gross Profit | $1,825,000 | $1,545,000 | |
| Selling Expenses | $780,000 | $464,000 | |
| Administrative Expenses | $485,000 | $423,000 | |
| Total Operating Expenses | $1,465,000 | $887,000 | |
| Income From Operations | $360,000 | $658,000 | |
| Other Income | $25,000 | $19,200 | |
| Earnings before Interest & taxes (EBIT) | $385,000 | $677,200 | |
| Other Expenses (interest) | $105,000 | $64,000 | |
| Income Before Income Tax | $280,000 | $613,200 | |
| Income Tax Expense | $35,000 | $176,000 | |
| Net Income | $245,000 | $437,200 |
`
Star Industries
Comparative Retained Earnings Statement
For the Years Ended December 31, 2010 and 2009
| 2010 | 2009 | ||
| Retained Earnings, Januray 1 | $ 723,000 | $ 355,800 | |
| Add Net Income for year | $245,000 | $437,200 | |
| Total | $ 968,000 | $ 793,000 | |
| Deduct dividends: | |||
| Preferred Stock | $ 40,000 | $ 40,000 | |
| Common Stock | $ 45,000 | $ 30,000 | |
| Total | $ 85,000 | $ 70,000 | |
| Retained Earnings, December 31 | $883,000 | $ 723,000 |
Star Industries
Comparative Balance Statement
December 31, 2010 and 2009
| 12-31-2010 | 12-31-2009 | ||||
| Assets | |||||
| Current Assets | |||||
| Cash | $235,000 | $215,000 | |||
| Temporary Investments | $10,000 | $50,000 | |||
| Accounts Receivable (Net) | $525,000 | $425,000 | |||
| Inventories | $940,000 | $580,000 | |||
| Prepaid Expenses | $30,000 | $20,000 | |||
| Total Current Assets | $1,740,000 | $1,290,000 | |||
| Long-Term Investments | $165,000 | $135,000 | |||
| Property, Plant and Equipment (Net) | $2,525,000 | $1,878,000 | |||
| Total Assets | $4,430,000 | $3,303,000 | |||
| Liabilities | |||||
| Current Liabilities | $950,000 | $780,000 | |||
| Long-Term Liabilities | |||||
| Mortgage Note Payable 8% (due 2013) | $410,000 | $0 | |||
| Bonds Payable, 7% (due 2016) | $1,200,000 | $800,000 | |||
| Total Long Term Liabilities | $1,610,000 | $800,000 | |||
| Total Liabilities | $2,560,000 | $1,580,000 | |||
| Stockholders' Equity | |||||
| Preferred 8% stock, $ 100 Par | $300,000 | $300,000 | |||
| Common Stock, $ 10 Par | $700,000 | $700,000 | |||
| Retained Earnings | $883,000 | $723,000 | |||
| Total Stockholders' Equity | $1,883,000 | $1,723,000 | |||
| Total Liabilities and Stockholders' Equity | $4,443,000 | $3,303,000 | |||
Determine the following measures for 2010: Compare with industry norms and comment:
| Ratios | Industry Norm | ||||
| 1. Working Capital | N/A | ||||
| 2. Current Ratio | 2.2 | ||||
| 3. Quick Ratio | 0.8 | ||||
| 4. Accounts Receivable Turnover | 16.0 | ||||
| 5. Number of days sales in receivables | 22.2 | ||||
| 6. Inventory Turnover | 5.0 | ||||
| 7. Number of days sales in inventory | 75.0 | ||||
| 8. Ratio of fixed assets to long-term liabilites | 2.0 | ||||
| 9. Ratio of liabilities to stockkholders equity | 0.7 | ||||
| 10. Number of times interest charges are earned | 8.5 | ||||
| 11. Number of times preferred dividends earned | 7.1 | ||||
| 12. Ratio of net sales to assets | 2.1 | ||||
| 13. Rate earned on total assets | 8.5% | ||||
| 14. Rate earned on stockholders' equity | 12.0% | ||||
| 15. Rate earned on common stockholders' equity | 14.2% | ||||
| 16. Earnings per share on common stock | $3.65 | ||||
| 17. Price-earnings ratio | 9.2 | ||||
| 18. Dividends per share | $0.80 | ||||
| 19. Dividend yield | 2.50% | ||||
Thanks!
Additional funds needed
Morrissey Technologies Inc.'s 2012 financial statements are shown here.
| Morrissey Technologies Inc.: Balance Sheet as of December 31, 2012 | ||||
| Cash | $180,000 | Accounts payable | $360,000 | |
| Receivables | 360,000 | Notes payable | 56,000 | |
| Inventories | 720,000 | Accrued liabilities | 180,000 | |
| Total current assets | $1,260,000 | Total current liabilities | $596,000 | |
| Long-term debt | 100,000 | |||
| Fixed assets | 1,440,000 | Common stock | 1,800,000 | |
| Retained earnings | 204,000 | |||
| Total assets | $2,700,000 | Total liabilities and equity | $2,700,000 | |
| Morrissey Technologies Inc.: Income Statement for December 31, 2012 | |||
| Sales | $3,600,000 | ||
| Operating costs including depreciation | 3,279,720 | ||
| EBIT | $320,280 | ||
| Interest | 20,280 | ||
| EBT | $300,000 | ||
| Taxes (40%) | 120,000 | ||
| Net Income | $180,000 | ||
| Per Share Data: | |||
| Common stock price | $45.00 | ||
| Earnings per share (EPS) | $1.80 | ||
| Dividends per share (DPS) | $1.08 | ||
Suppose that in 2013, sales increase by 15% over 2012 sales. The firm currently has 100,000 shares outstanding. It expects to maintain its 2012 dividend payout ratio and believes that its assets should grow at the same rate as sales. The firm has no excess capacity. However, the firm would like to reduce its Operating costs/Sales ratio to 89.5% and increase its total debt-to-assets ratio to 30%. (It believes that its current debt ratio is too low relative to the industry average.) The firm will raise 30% of 2013 forecasted total debt as notes payable, and it will issue long-term bonds for the remainder. The firm forecasts that its before-tax cost of debt (which includes both short-term and long-term debt) is 12%. Assume that any common stock issuances or repurchases can be made at the firm's current stock price of $45.
- Construct the forecasted financial statements assuming that these changes are made. What are the firm's forecasted notes payable and long-term debt balances? What is the forecasted addition to retained earnings? Round your answers to the nearest cent.
Morrissey Technologies Inc. Pro Forma Income Statement December 31, 2013 2012 2013 Pro Forma Sales $3,600,000 $ Operating costs (includes depreciation) 3,279,720 $ EBIT $320,280 $ Interest expense 20,280 $ EBT $300,000 $ Taxes (40%) 120,000 $ Net Income $180,000 $ Dividends $ $ Addition to RE $ $ Morrissey Technologies Inc. Pro Forma Balance Statement December 31, 2013 2012 2013 Pro Forma Cash $180,000 $ Accounts receivable 360,000 $ Inventories 720,000 $ Fixed assets 1,440,000 $ Total assets $2,700,000 $ Payables + accruals $540,000 $ Short-term bank loans 56,000 $ Total current liabilities $596,000 $ Long-term bonds 100,000 $ Total debt $696,000 $ Common stock 1,800,000 $ Retained earnings 204,000 $ Total common equity $2,004,000 $ Total liab. and equity $2,700,000 $ - If the profit margin remains at 5% and the dividend payout ratio remains at 60%, at what growth rate in sales will the additional financing requirements be exactly zero? In otherwords, what is the firm's sustainable growth rate? (Hint: Set AFN equal to zero and solve for g.) Round your answer to two decimal places.
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