This sheet provides the answers to the PRACTICE Problem based on the Rainbow Paint Company DataThe sheet titled "Detail Computations" gives the specific ratio computations. RatioSolution1 Working capital$750,000.00 2 Current ratio23 Quick ratio14 Accounts receivable turnover13.33 Times5 Number of days' sales in receivables27.38 Days6 Inventory turnover5.677 Number of days' sales in inventory64.41 Days8 Ratio of fixed assets to long-term liabilities1.739 Ratio of liabilities to stockholders' equity1.0410 Number of times interest charges earned6.19 Times11 Number of times preferred dividends earned6.13 Times12 Ratio of net sales to assets1.4313 Rate earned on total assets6.98%14 Rate earned on stockholders' equity13.59%15 Rate earned on common stockholders' equity3.93%16 Earnings per share on common stock$4.10 17 Price-earnings ratio6.118 Dividends per share of common stock$0.90 19 Dividend yield3.60%
Rainbow Paint Co. Comparative Income Statement For the Years Ended Decem2013Sales $5,125,000 Sales returns and allowances 125,000Net sales $5,000,000 Cost of goods sold 3,400,000Gross profit $1,600,000 Selling expenses $650,000 Administrative expenses 325,000
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Balance Sheet,Generally Accepted Accounting Principles,Rainbow Paint Company Data