ninetween measures of solvency and profitability 425093

Nineteen Measures of Solvency andProfitability

The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $52 on December 31, 2012.

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Blige Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2012 and 2011
	2012	2011
Retained earnings, January 1	$1,661,950	$1,406,850
Add net income for year	369,200	288,200
Total	$2,031,150	$1,695,050
Deduct dividends:
On preferred stock	$12,600	$12,600
On common stock	20,500	20,500
Total	$33,100	$33,100
Retained earnings, December 31	$1,998,050	$1,661,950

Blige Inc.
Comparative Income Statement
For the Years Ended December 31, 2012 and 2011
	2012	2011
Sales	$2,394,265	$2,202,700
Sales returns and allowances	11,910	7,740
Net sales	$2,382,355	$2,194,960
Cost of goods sold	817,600	752,190
Gross profit	$1,564,755	$1,442,770
Selling expenses	$560,000	$670,170
Administrative expenses	477,035	393,590
Total operating expenses	1,037,035	1,063,760
Income from operations	$527,720	$379,010
Other income	27,780	24,190
	$555,500	$403,200
Other expense (interest)	136,000	75,200
Income before income tax	$419,500	$328,000
Income tax expense	50,300	39,800
Net income	$369,200	$288,200

Blige Inc.
Comparative Balance Sheet
December 31, 2012 and 2011
	Dec. 31, 2012	Dec. 31, 2011
Assets
Current assets:
Cash	$390,570	$347,360
Temporary investments	591,130	575,640
Accounts receivable (net)	401,500	379,600
Inventories	292,000	219,000
Prepaid expenses	73,896	69,470
Total current assets	$1,749,096	$1,591,070
Long term investments	1,023,394	300,598
Property, plant, and equipment (net)	2,210,000	1,989,000
Total assets	$4,982,490	$3,880,668
Liabilities
Current liabilities	$514,440	$508,718
Long term liabilities:
Mortgage note payable, 8%, due 2017	$760,000	$0
Bonds payable, 8%, due 2021	940,000	940,000
Total long term liabilities	$1,700,000	$940,000
Total liabilities	$2,214,440	$1,448,718
Stockholders’ Equity
Preferred $0.70 stock, $20 par	$360,000	$360,000
Common stock, $10 par	410,000	410,000
Retained earnings	1,998,050	1,661,950
Total stockholders’ equity	$2,768,050	$2,431,950
Total liabilities and stockholders’ equity	$4,982,490	$3,880,668

Instructions:

Determine the following measures for 2012, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Assume 365 days a year.

1. Working capital:	$
2. Current ratio:
3. Quick ratio:
4. Accounts receivable turnover:
5. Number of days’ sales in receivables:
6. Inventory turnover:
7. Number of days’ sales in inventory:
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 earned:
12. Ratio of net 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: