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P9-4 The comparative financial statements of Optical Solutions Inc. are as follows. The market price of Optical Solutions Inc. common stock was...
P9-4The comparative financial statements of Optical Solutions Inc. are as follows.The market price of Optical Solutions Inc. common stock was $60.00 onDecember 31, 2010.Optical Solutions Inc.Comparative Retained Earnings StatementFor the Years Ended December 31, 2010 and 20092010 2009Retained earnings, January 1 $ 604,000 $306,000Add net income for year 428,000 314,000Total $1,032,000 $620,000Deduct dividends:On preferred stock $ 4,000 $ 4,000On common stock 12,000 12,000Total $ 16,000 $ 16,000Retained earnings, December 31 $1,016,000 $604,000Optical Solutions Inc.Comparative Income StatementFor the Years Ended December 31, 2010 and 20092010 2009Sales $1,608,000 $1,481,600Sales returns and allowances 5,920 6,000Net sales $1,602,080 $1,475,600Cost of goods sold 480,200 499,200Gross profit $1,121,880 $ 976,400Selling expenses $ 324,000 $ 352,000Administrative expenses 234,000 211,200Total operating expenses $ 558,000 $ 563,200Income from operations $ 563,880 $ 413,200Other income 24,000 19,200$ 587,880 $ 432,400Other expense (interest) 110,720 80,000Income before income tax $ 477,160 $ 352,400Income tax expense 49,160 38,400Net income $ 428,000 $ 314,000Dec. 31, 2010 Dec. 31, 2009AssetsCurrent assets:Cash $ 240,000 $ 162,400Temporary investments 364,000 328,800Accounts receivable (net) 260,000 211,200Inventories 208,000 66,400Prepaid expenses 44,000 23,200Total current assets $1,116,000 $ 792,000Long-term investments 204,800 256,000Property, plant, and equipment (net). 1,539,200 976,000Total assets. $2,860,000 $2,024,000LiabilitiesCurrent liabilities $ 360,000 $ 320,000Long-term liabilities:Mortgage note payable, 8%, due 2015 $ 384,000 —Bonds payable, 10%, due 2019 800,000 $ 800,000Total long-term liabilities $1,184,000 $ 800,000Total liabilities. $1,544,000 $1,120,000Stockholders’ EquityPreferred $2.00 stock, $50 par $ 100,000 $ 100,000Common stock, $5 par 200,000 200,000Retained earnings 1,016,000 604,000Total stockholders’ equity $1,316,000 $ 904,000Total liabilities and stockholders’ equity. $2,860,000 $2,024,000InstructionsDetermine the following measures for 2010, rounding to one decimal place:1. Working capital2. Current ratio3. Quick ratio4. Accounts receivable turnover5. Number of days’ sales in receivables6. Inventory turnover7. Number of days’ sales in inventory8. Ratio of fixed assets to long-term liabilities9. Ratio of liabilities to stockholders’ equity10. Number of times interest charges earned11. Number of times preferred dividends earned12. Ratio of net sales to assets13. Rate earned on total assets14. Rate earned on stockholders’ equity15. Rate earned on common stockholders’ equity16. Earnings per share on common stock17. Price-earnings ratio18. Dividends per share of common stock19. Dividend yield
