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The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 2018.
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AUTOMOTIVE SOLUTIONS INC. |
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2018 |
2017 |
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Sales |
$10,000,000 |
$ 9,400,000 |
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Cost of goods sold |
(5,350,000) |
(4,950,000) |
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Gross profit |
$ 4,650,000 |
$ 4,450,000 |
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Selling expenses |
$ (2,000,000) |
$(1,880,000) |
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Administrative expenses |
(1,500,000) |
(1,410,000) |
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Total operating expenses |
$ (3,500,000) |
$(3,290,000) |
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Operating income |
$ 1,150,000 |
$ 1,160,000 |
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Other revenue and expense: |
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Other revenue |
150,000 |
140,000 |
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Other expense (interest) |
(170,000) |
(150,000) |
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Income before income tax |
$ 1,130,000 |
$ 1,150,000 |
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Income tax expense |
(230,000) |
(225,000) |
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Net income |
$ 900,000 |
$ 925,000 |
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AUTOMOTIVE SOLUTIONS INC. |
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2018 |
2017 |
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Preferred |
Common |
Retained |
Preferred |
Common |
Retained |
|||||||||||||
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Balances, Jan. 1 |
$500,000 |
$500,000 |
$5,375,000 |
$500,000 |
$500,000 |
$4,545,000 |
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Net income |
900,000 |
925,000 |
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Dividends: |
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Preferred stock |
(45,000) |
(45,000) |
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Common stock |
(50,000) |
(50,000) |
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Balances, Dec. 31 |
$500,000 |
$500,000 |
$6,180,000 |
$500,000 |
$500,000 |
$5,375,000 |
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AUTOMOTIVE SOLUTIONS INC. |
|||||
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Dec. 31, 2018 |
Dec. 31, 2017 |
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Assets |
|||||
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Current assets: |
|||||
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Cash |
$ 500,000 |
$ 400,000 |
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Marketable securities |
1,010,000 |
1,000,000 |
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Accounts receivable (net) |
740,000 |
510,000 |
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Inventories |
1,190,000 |
950,000 |
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Prepaid expenses |
250,000 |
229,000 |
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Total current assets |
$3,690,000 |
$3,089,000 |
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Long-term investments |
2,350,000 |
2,300,000 |
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Property, plant, and equipment (net) |
3,740,000 |
3,366,000 |
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Total assets |
$9,780,000 |
$8,755,000 |
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Liabilities |
|||||
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Current liabilities |
$ 900,000 |
$ 880,000 |
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Long-term liabilities: |
|||||
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Mortgage note payable, 10% |
$ 200,000 |
$ 0 |
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Bonds payable, 10% |
1,500,000 |
1,500,000 |
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Total long-term liabilities |
$1,700,000 |
$1,500,000 |
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Total liabilities |
$2,600,000 |
$2,380,000 |
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Stockholders’ Equity |
|||||
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Preferred $0.90 stock, $10 par |
$ 500,000 |
$ 500,000 |
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Common stock, $5 par |
500,000 |
500,000 |
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Retained earnings |
6,180,000 |
5,375,500 |
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Total stockholders’ equity |
$7,180,000 |
$6,375,000 |
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Total liabilities and stockholders’ equity |
$9,780,000 |
$8,755,000 |
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Instructions:
Determine the following measures for 20Y8.
Round ratio values to one decimal place and dollar amounts to the nearest cent. For number of days’ sales in receivables and number of days’ sales in inventory, round intermediate calculations to the nearest whole dollar and final amounts to one decimal place. Assume there are 365 days in the year.
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1. Working capital |
$ |
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2. Current ratio |
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3. Quick ratio |
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4. Accounts receivable turnover |
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5. Days’ sales in receivables |
days |
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6. Inventory turnover |
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7. Days’ sales in inventory |
days |
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8. Debt ratio |
% |
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9. Ratio of liabilities to stockholders’ equity |
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10. Ratio of fixed assets to long-term liabilities |
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11. Times interest earned |
times |
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12. Times preferred dividends earned |
times |
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13. Asset turnover |
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14. Return on total assets |
% |
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15. Return on stockholders’ equity |
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