E15.20 (LO 4) (Trading on the Equity Analysis) Presented below is information from the annual report...
E15.20 (LO 4) (Trading on the Equity Analysis) Presented below is information from the annual report of Emporia Plastics, Inc.
| Operating income |
$532,150 |
|
| Bond interest expense |
135,000 |
|
|
397,150 |
||
| Income taxes |
183,432 |
|
| Net income |
$213,718 |
|
| Bonds payable |
$1,000,000 |
|
| Common stock |
875,000 |
|
| Retained earnings |
375,000 |
Instructions
a. Compute the return on common stockholders’ equity and the rate of interest paid on bonds. (Assume balances for debt and equity accounts approximate averages for the year.)
b. Is Emporia Plastics, Inc. trading on the equity successfully? Explain.
Homework Answers
a. Return on common stockholders = Net Income / common stock equity
= {213718/(875000+375000)}*100
= 17.10%
Rate of interest paid on bonds = 135000/1000000
= 13.5%
b. Yes
Add Answer to:
E15.20 (LO 4) (Trading
on the Equity Analysis) Presented below is information
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Exercise 15-20 Presented below is information from the annual report of Cullumber Plastics, Inc. Operating income...
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Exercise 15-20 Presented below is information from the annual report of Bonita Plastics, Inc. Operating income Bond interest expense $540,300 120,400 419,900 201,820 $218,080 Income taxes Net income Bonds payable Common stock Retained earnings $860,000 792,000 368,000 (a) Compute the return on common stockholders' equity and the rate of interest paid on bonds. (Assume balances for debt and equity accounts approximate averages for the year.) (Round answers to 1 decimal place, e.g. 16.8%.) Rate of return on common stock equity...
Exercise 15-20 Presented below is information from the annual report of Blue Plastics, Inc. Operating income...
Exercise 15-20
Presented below is information from the annual report of Blue
Plastics, Inc.
Operating income
$583,200
Bond interest expense
134,930
448,270
Income taxes
268,427
Net income
$179,843
Bonds payable
$1,030,000
Common stock
837,000
Retained earnings
370,000
(a) Compute the return on common stockholders’
equity and the rate of interest paid on bonds. (Assume balances for
debt and equity accounts approximate averages for the year.)
(Round answers to 1 decimal place, e.g.
16.8%.)
Rate of return on common stock equity...
Accounting, Analysis, and Principles The following information is taken from the 2020 annual report of Bugant,...
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The following information is taken from the 2020 annual report of Wildhorse, Inc. Wildhorse’s fiscal year...
The following information is
taken from the 2020 annual report of Wildhorse, Inc. Wildhorse’s
fiscal year ends December 31 of each year. Wildhorse’s December 31,
2020, balance sheet is as follows.
Wildhorse,
Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of
discount)
$1,426
Stockholders’
equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
Note X:...
The following information is taken from the 2017 annual report of Metlock, Inc. Metlock's fiscal year...
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The following information is taken from the 2020 annual report of Wildhorse, Inc. Wildhorse’s fiscal year...
The following information is taken from the 2020 annual report
of Wildhorse, Inc. Wildhorse’s fiscal year ends December 31 of each
year. Wildhorse’s December 31, 2020, balance sheet is as
follows.
Wildhorse, Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of discount)
$1,426
Stockholders’ equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
Note X:...
The following information is taken from the 2020 annual report of Wildhorse, Inc. Wildhorse’s fiscal year...
The following information is taken from the 2020 annual report
of Wildhorse, Inc. Wildhorse’s fiscal year ends December 31 of each
year. Wildhorse’s December 31, 2020, balance sheet is as
follows.
Wildhorse, Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of discount)
$1,426
Stockholders’ equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
Note X:...
Exercise 15-20 Presented below is information from the annual report of Bonita Plastics, Inc. Operating income Bond interest expense $540,300 120,400 419,900 201,820 $218,080 Income taxes Net income Bonds payable Common stock Retained earnings $860,000 792,000 368,000 (a) Compute the return on common stockholders' equity and the rate of interest paid on bonds. (Assume balances for debt and equity accounts approximate averages for the year.) (Round answers to 1 decimal place, e.g. 16.8%.) Rate of return on common stock equity...
Exercise 15-20
Presented below is information from the annual report of Blue
Plastics, Inc.
Operating income
$583,200
Bond interest expense
134,930
448,270
Income taxes
268,427
Net income
$179,843
Bonds payable
$1,030,000
Common stock
837,000
Retained earnings
370,000
(a) Compute the return on common stockholders’
equity and the rate of interest paid on bonds. (Assume balances for
debt and equity accounts approximate averages for the year.)
(Round answers to 1 decimal place, e.g.
16.8%.)
Rate of return on common stock equity...
Accounting, Analysis, and Principles The following information is taken from the 2020 annual report of Bugant, Inc. Bugant's fiscal year ends December 31 of each year. Bugant's December 31, 2020, balance sheet is as follows. $ 450 1,800 2,250 2,000 Bugant, Inc. Balance Sheet December 31, 2020 Assets Cash Inventory Total current assets Plant and equipment Accumulated depreciation Total assets Liabilities Bonds payable (net of discount) Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity (160) $4,090 $1,426...
The following information is
taken from the 2020 annual report of Wildhorse, Inc. Wildhorse’s
fiscal year ends December 31 of each year. Wildhorse’s December 31,
2020, balance sheet is as follows.
Wildhorse,
Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of
discount)
$1,426
Stockholders’
equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
Note X:...
The following information is taken from the 2017 annual report of Metlock, Inc. Metlock's fiscal year ends December 31 of each year, Metlock's December 31, 2017, balance sheet is as follows 3490 Metlock Inc Balance sheet December 31, 2017 Assets Cash Inventory Total current assets Plant and equipment Accumulated depreciation Total assets Liabilities Bonds payable (net of discount) Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity 1.700 2.190 2.000 (1601 4,030 $1.426, $4.030 Note X: Long Term...
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Presented below is information related to Victor Company at December 31, 2019. Assume a tax rate of 30% on all items. Accounts Payable $ 204,975 Income Tax Payable S 78,000 Accounts Receivable $ 259,200 Interest Payable $ 2,850 Accum. Deprec - Building $ 391,500 Inventory $ 790,125 Additional Paid-In Capital $ 81,900 Land $ 232,500 Allow for Doubtful Accounts $ 3,900 Notes Payable (6 months) $ 96,000 Bonds Payable (due 2025) $ 600,000 Notes Receivable (6 months) $ 69,000 Buildings...
The following information is taken from the 2020 annual report
of Wildhorse, Inc. Wildhorse’s fiscal year ends December 31 of each
year. Wildhorse’s December 31, 2020, balance sheet is as
follows.
Wildhorse, Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of discount)
$1,426
Stockholders’ equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
Note X:...
The following information is taken from the 2020 annual report
of Wildhorse, Inc. Wildhorse’s fiscal year ends December 31 of each
year. Wildhorse’s December 31, 2020, balance sheet is as
follows.
Wildhorse, Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of discount)
$1,426
Stockholders’ equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
Note X:...
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