Question

The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $55 on December 31, 2016.

Blige Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2016 and 2015
			2016		2015
Retained earnings, January 1			$1,029,350		$873,250
Add net income for year			224,000		178,800
Total			$1,253,350		$1,052,050
Deduct dividends
	On preferred stock		$7,700		$7,700
	On common stock		15,000		15,000
		Total	$22,700		$22,700
Retained earnings, December 31			$1,230,650		$1,029,350

Blige Inc.
Comparative Income Statement
For the Years Ended December 31, 2016 and 2015
	2016		2015
Sales	$1,283,150		$1,180,500
Sales returns and allowances	6,380		4,150
Sales	$1,276,770		$1,176,350
Cost of goods sold	470,120		432,510
Gross profit	$806,650		$743,840
Selling expenses	$264,000		$322,350
Administrative expenses	224,880		189,310
Total operating expenses	488,880		511,660
Income from operations	$317,770		$232,180
Other income	16,730		14,820
	$334,500		$247,000
Other expense (interest)	80,000		44,000
Income before income tax	$254,500		$203,000
Income tax expense	30,500		24,200
Net income	$224,000		$178,800

Blige Inc.
Comparative Balance Sheet
December 31, 2016 and 2015
			Dec. 31, 2016		Dec. 31, 2015
Assets
Current assets
	Cash		$264,800		$199,970
	Temporary investments		400,770		331,380
	Accounts receivable (net)		248,200		233,600
	Inventories		189,800		146,000
	Prepaid expenses		50,094		39,990
		Total current assets	$1,153,664		$950,940
Long-term investments			607,506		198,421
Property, plant, and equipment (net)			1,300,000		1,170,000
Total assets			$3,061,170		$2,319,361
Liabilities
Current liabilities			$360,520		$270,011
Long-term liabilities
	Mortgage note payable, 8%, due 2021		$450,000		$0
	Bonds payable, 8%, due 2017		550,000		550,000
		Total long-term liabilities	$1,000,000		$550,000
Total liabilities			$1,360,520		$820,011
Stockholders' Equity
Preferred $0.7 stock, $20 par			$220,000		$220,000
Common stock, $10 par			250,000		250,000
Retained earnings			1,230,650		1,029,350
	Total stockholders' equity		$1,700,650		$1,499,350
Total liabilities and stockholders' equity			$3,061,170		$2,319,361

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.

1. Working capital	$	793,144
2. Current ratio		3.2
3. Quick ratio		2.3
4. Accounts receivable turnover		5.3
5. Number of days' sales in receivables		days
6. Inventory turnover		2.8
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		%

Answer 1

solution: Formula Current assets-current liabilities Current assets/current liabilities calculation 1153664-360520 1153664/360520 Answer 1 Working capital 2 Current ratio 3 Quick ratio 793144 3.2 2.5 Cash marketable securities +A/R)/current liabilities net credit sales faverage account receivable 365/Accounts receivable turnover COGS/average invento 365/Inventory tunover fixed assets/long term liabilities Total liabiltiies/stockholder equi (Income from operation+other revenue/Interest exp 264800+400770+248200/360520 1276770/(248200+233600/2 365/5.3 470120/(189800+146000)/2) 365/2.8 1300000/1000000 1360520/1700650 334500/80000 224000/7700 1276770/(3061170+2319361)/2) 224000/(3061170+2319361]/2) 224000/((1700650+1499350)/2) (224000-7700)/(250000+1230650+250000+1029350/2) (224000-7700/(250000+250000)/2)/10) 55/8.65 15000/(250000/10) 0.60/55 4 Accounts receivable tumover 5.3 5 Number of days' sales in receivables 63.9 days turnover 2.8 7 Number of days' sales in invent 130.4 8 Ratio of fixed assets to long-term liabilities 1.3 0.8 9 Ratio of liabilities to stockholders' equi 10 Number of times interest charges are earned 11 Number of times preferred dividends are earne Net income/preferred dividend 12 ratio of sales to assets 13 Rate earned on total assets 14 Rate earned on stockholders' equit 15 Rate earned on common stockholders 4.2 29.1 0.5 net sales /average total assets net income/average Total assets net income/average stockholder equit net income-preferred dividend/average common stockholder equi net in MPS/EPS common stock dividend/common stock outstandin Dividend per share of common stock/MPS 8.3% 14.0% 15.7% 8.65 6.4 0.6 1.1% 16 Earnings per share on common stock ferred dividend/Average common stock outstandin 17 Price-earnings ratio 18 Dividends per share of common stock 19 Dividend vield EPS Earning per share MPS-Market price per share 4 ▶ bi Sheet1 225 Sheet1226 Sheet1227 Sheet1228 Sheet1229 Sheet1230 Sheet1 231 Sheet!232 ENG UK 02/02/2019 11:30