Question

Nineteen Measures of Solvency and Profitability

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		2.5
4. Accounts receivable turnover		5.3
5. Number of days' sales in receivables		68.9 days
6. Inventory turnover		2.8
7. Number of days' sales in inventory		130.4 days
8. Ratio of fixed assets to long-term liabilities		1.3
9. Ratio of liabilities to stockholders' equity		0.8
10. Number of times interest charges are earned		4.2
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		14.0 %
15. Rate earned on common stockholders' equity		15.7 %
16. Earnings per share on common stock	$	8.65
17. Price-earnings ratio		6.4
18. Dividends per share of common stock	$	0.6
19. Dividend yield		1.1 %

Just need help on 11-13, everything else is correct.

Answer 1

11. Number of times preferred dividends are earned = Net Income / Preferred Dividend

= $224000 / $7700

= 29.09 times

12. Ratio of sales to assets = Sales / Avg. total Assets

= $1283150 / ($3061170+$2319361)/2

= $1283150 / $2690266

= 0.477

13. Rate earned on total assets for 2106 = Net Income / Total Assets

= $224000 / $3061170

= 0.0732 or 7.32%