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P18-6A The comparative statements of Dillon Company are presented below.
P18-6AThe comparative statements of Dillon Company are presented below.DILLON COMPANYIncome StatementFor the Year Ended December 31Douglas Company Maulder Company2009 2008 2009 2008Net sales $1,549,035 $339,038 Cost of goods sold 1,080,490 241,000 Operating expenses 302,275 79,000 Interest expense 8,980 2,252 Income tax expense 54,500 6,650 Current assets 325,975 $ 312,410 83,336 $ 79,467Plant assets (net) 521,310 500,000 139,728 125,812Current liabilities 65,325 75,815 35,348 30,281Long-term liabilities 108,500 90,000 29,620 25,000Common stock, $10 par 500,000 500,000 120,000 120,000Retained earnings 173,460 146,595 38,096 29,998Instructions(a) Prepare a vertical analysis of the 2009 income statement data for Douglas Company and Maulder Company in columnar form.(b) Comment on the relative profitability of the companies by computing the return on assets and the return on common stockholders equity ratios for both companies.P15-6 The comparative statements of Dillon Company are presented below.DILLON COMPANY Income Statement For Year Ended December 31 2009 2008Net sales (all on accounts) $ 600,000 $ 520,000Expenses Cost of goods sold 415,000 354,000Selling and administrative 120,800 114,800Interest Expense 7,800 6,000Income tax expense 18,000 $ 14,000Net income 561,600 488,800$ 38,400 $ 31,200DILLON COMPANY Balance Sheet December 31 Assets 2009 2008Current assets Cash 21,000 18,000Short term investments 18,000 15,000Accounts receivable (net) 86,000 74,000Inventory 90,000 70,000Total Current assets 215,000 177,000Plant assets (net) 423,000 383,000Total assets $ 638,000 $ 560,000Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 122,000 $ 110,000Income taxes payable 23,000 20,000Total current liabilities $ 145,000 $ 130,000Long term liabilities Bonds payable 120,000 80,000Total liabilities $ 265,000 $ 210,000Stockholders' equity Common stock ($5 par) 150,000 150,000Retained earnings 223,000 200,000Total stockholder' equity 373,000 350,000Total liabilities & stockholders equity $ 638,000 $ 560,000Additional data:The common stock recently sold at $19.50 per share.The year-end balance in the allowance for doubtful accounts was $3,000 for 2009 and $2,400 for 2008.InstructionsCompute the following ratios for 2009.(a) Current. (h) Return on common stockholders equity.(b) Acid-test. (i) Earnings per share.(c) Receivables turnover. (j) Price-earnings.(d) Inventory turnover. (k) Payout.(e) Profit margin. (l) Debt to total assets.(f) Asset turnover. (m) Times interest earned.(g) Return on assets.
