Question

The comparative statements of Sheridan Company are presented here.

SHERIDAN COMPANY Income Statements For the Years Ended December 31
		2017		2016
Net sales		$1,899,640		$1,759,600
Cost of goods sold		1,067,640		1,015,100
Gross profit		832,000		744,500
Selling and administrative expenses		509,100		488,100
Income from operations		322,900		256,400
Other expenses and losses
Interest expense		24,100		22,100
Income before income taxes		298,800		234,300
Income tax expense		94,100		75,100
Net income		$ 204,700		$ 159,200

SHERIDAN COMPANY Balance Sheets December 31
Assets		2017		2016
Current assets
Cash		$ 60,100		$ 64,200
Debt investments (short-term)		74,000		50,000
Accounts receivable		126,900		111,900
Inventory		128,100		117,600
Total current assets		389,100		343,700
Plant assets (net)		660,000		531,300
Total assets		$1,049,100		$875,000
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$ 169,100		$154,500
Income taxes payable		45,600		44,100
Total current liabilities		214,700		198,600
Bonds payable		231,000		211,000
Total liabilities		445,700		409,600
Stockholders’ equity
Common stock ($5 par)		290,000		300,000
Retained earnings		313,400		165,400
Total stockholders’ equity		603,400		465,400
Total liabilities and stockholders’ equity		$1,049,100		$875,000

All sales were on account. Net cash provided by operating activities for 2017 was $231,000. Capital expenditures were $136,000, and cash dividends were $56,700.

Compute the following ratios for 2017. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)

(a)		Earnings per share		$Enter earnings per share in dollars
(b)		Return on common stockholders’ equity		Enter return on common stockholders' equity in percentages	%
(c)		Return on assets		Enter return on assets in percentages	%
(d)		Current ratio		Enter the current ratio value	:1
(e)		Accounts receivable turnover		Enter accounts receivable turnover in times	times
(f)		Average collection period		Enter average collection period in days	days
(g)		Inventory turnover		Enter inventory turnover in times	times
(h)		Days in inventory		Enter the number of days in inventory	days
(i)		Times interest earned		Enter times interest earned	times
(j)		Asset turnover		Enter asset turnover in times	times
(k)		Debt to assets ratio		Enter debt to assets ratio in percentages	%
(l)		Free cash flow		$Enter free cash flow in dollars

Answer 1

1	Earnings per share	= Earnings available to equity shareholders
		Outstanding weighted average number of equity shares
	No. of shares outstanding at beginning of year = 3,00,000 / 5 = 60,000
	No. of shares outstanding at end of year = 2,90,000 / 5 = 58,000
	Outstanding weighted average number of equity shares = 58,000 +2,000/2 = 59,000
		= 2,04,700 / 59,000
		= $ 3.47
2	Return on common shareholders equity			= 2,04,700 / 2,95,000
				= 69.38%
3	Return on assets	= Net Income
		Average Total assets
	Average total assets	= 10,49,100 + 8,75,000
		2
		= 9,62,050
	Return on assets	= 2,04,700 / 9,62,500 *100
		= 21.27%
4	Current ratio	= Current assets
		Current liabilities
		= 3,89,100
		2,14,700
		= 1.81