As of April 1, Sangvikar Company had the following balances in its inventory accounts:
Answer 1
Answer and explanation:
The calculation is shown below:-
1. Working capital = current assets – current liabilities
= $3,514,496 – $1,098,280
= $2,416,216
2. Current Liquidity Ratio = Current Assets ÷ Current Liabilities
= $3,514,496 ÷ $1,098,280
= 3.2 times
3. Quick Index = Quick Assets ÷ Current Liabilities
= ($762,860 + $1,154,610 + $824,900) ÷ $1,098,280
= 2.496 times
4. Accounts Receivable Turnover = Sales ÷ Average Accounts Receivable
= $4,316,490 ÷ ($824,900 + $773,800) ÷ 2
= $4,316,490 ÷ $799,350
= 5.4 times
5. Number of days sold on receivables = Number of days in a year ÷ Accounts receivable turnover
= 365 ÷ 5.4
= 67.59 days
6. Inventory Turnover = Cost of Goods Sold ÷ (Average Inventory)
= $1,553,440 ÷ ($627,800 + $481,800) ÷ 2
= $1,553,440 ÷ $554,800
= 2.8
7. Number of days of sale in stock = Number of days in a year ÷ Inventory turnover
= 365 ÷ 2.8
= 130.36 days
8. Ratio of fixed assets to long-term liabilities = Net fixed assets ÷ Total long-term liabilities
= $4,550,000 ÷ $3,500,000
= 1.3
9. Liabilities to equity ratio = Total liabilities ÷ Total equity
= $4,598,280 ÷ $5,747,850
= 0.80
10. Multiplied by interest earned = Operating revenue ÷ Other expenses (interest)
= $1,070,460 ÷ $280,000
= 3.82
11. Asset turnover = Sales ÷ Average total assets
= $4,316,490 ÷ ($10,346,130 + $8,125,942) ÷ 2
= $4,316,490 ÷ $9,236,036
= 0.467
12. Return on total assets = net income ÷ average total assets
= $745,200 ÷ $9,236,036
= 8.07%
13. Return on equity = Net profit ÷ Avg. net value
= $745,200 ÷ ($5,747,850 + $5,052,150) ÷ 2
= $745,200 ÷ $5,400,000
= 13.8%
14. Return on Equity = (Net Income – Preferred Dividend) ÷ (Average Common Equity
) = ($745,200 – $12,600) ÷ ($820,000 + $820,000 + $4,207,850 + $3,512,150) ÷ 2
= $732,600 ÷ $4,680,000
= 15.65%
15. Earnings per common share = (Net earnings – Preferred dividend) ÷ (Number of shares outstanding
) = $732,600 ÷ $82,000
= $8.93
16. Price to earnings ratio = Market price ÷ Earnings per share
= $52 ÷ $8.93
= 5.82
17. Dividends per common share = Dividend on common shares ÷ Number of shares outstanding
= $36,900 ÷ $82,000
= $0.45
18. Dividend yield = Dividends per common share ÷ Market price
= $0.45 ÷ $52
= 0.865%
Therefore, we apply the above formulas.