Copy of AC499_Unit4_Practice_Solutions-1 - This sheet provides the answers to the PRACTICE Problem based on the Rainbow Paint Company Data The sheet

Copy of AC499_Unit4_Practice_Solutions-1 - This sheet...

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This sheet provides the answers to the PRACTICE Problem based on the Rainbow Paint Company Data The sheet titled "Detail Computations" gives the specific ratio computations. Ratio Solution 1 Working capital $750,000.00 2 Current ratio 2 3 Quick ratio 1 4 Accounts receivable turnover 13.33 Times 5 Number of days' sales in receivables 27.38 Days 6 Inventory turnover 5.67 7 Number of days' sales in inventory 64.41 Days 8 Ratio of fixed assets to long-term liabilities 1.73 9 Ratio of liabilities to stockholders' equity 1.04 10 Number of times interest charges earned 6.19 Times 11 Number of times preferred dividends earned 6.13 Times 12 Ratio of net sales to assets 1.43 13 Rate earned on total assets 6.98% 14 Rate earned on stockholders' equity 13.59% 15 Rate earned on common stockholders' equity 3.93% 16 Earnings per share on common stock $4.10 17 Price-earnings ratio 6.1 18 Dividends per share of common stock $0.90 19 Dividend yield 3.60%
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Rainbow Paint Co. Comparative Income Statement For the Years Ended Decem 2013 Sales $5,125,000 Sales returns and allowances 125,000 Net sales $5,000,000 Cost of goods sold 3,400,000 Gross profit $1,600,000 Selling expenses $650,000 Administrative expenses 325,000 Total operating expenses $975,000 Income from operations $625,000 Other income 25,000 $650,000 Other expense (interest) 105,000 Income before income tax $545,000 Income tax expense 300,000 Net income $245,000 2013 Retained earnings, January 1 $723,000
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