Recitation solut-Ch 17

Recitation solut-Ch 17 - (15-20 min.) a. E 17-18 Current...

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(15-20 min.) E 17-18 a. Current ratio: 2007: $61,000 + $28,000 + $122,000 + $237,000 = 1.63 $275,000 2006: $47,000 + $116,000 + $272,000 = 2.15 $202,000 b. Acid-test ratio: 2007: $61,000 + $28,000 + $122,000 = 0.77 $275,000 2006: $47,000 + $116,000 = 0.81 $202,000 c. Debt ratio: 2007: $315,000* = 0.56 2006: $254,000** = 0.52 $560,000 $490,000 __________ __________ *$275,000 + $40,000 = $315,000 **$202,000 + $52,000 = $254,000 d. Times-interest-earned ratio: 2007: $165,000 = 3.44 times 2006: $158,000 = 4.05 times $48,000 $39,000 Summary: The company’s ability to pay its current liabilities, total liabilities, and interest expense deteriorated during 2007, as shown by the worsening of all four ratios.
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(10-15 min.) E 17-19 (Dollars in thousands) a. Rate of return on net sales: 2006: $16,000 = 0.092 2005: $12,000 = 0.076 $174,000 $158,000 b. Rate of return on total assets: 2006: $16,000 + $9,000 = 0.127 2005: $12,000 + $10,000 = 0.122 $197,500* $181,000** __________ __________ *($204,000 + $191,000) / 2 = $197,500 **($191,000 + $171,000) / 2 = $181,000 c. Rate of return on common stockholders’ equity: 2006: $16,000 $3,000 = 0.141 2005: $12,000 $3,000 = 0.107 $92,500*** $84,000**** __________ __________ ***($96,000 + $89,000) / 2 = $92,500 ****($89,000 + $79,000) / 2 = $84,000 d. Earnings per share of common stock: 2006: $16,000 $3,000 = $0.65 2005: $12,000 $3,000 = $0.45 20,000 20,000 The company’s operating performance improved during 2006. All four profitability measures increased.
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(10-15 min.) E 17-20 2008 2007 a. Price/earnings ratio: $16.50 = 27.5 $13 = 26 ($60,000 $12,000) / 80,000 ($52,000 $12,000) / 80,000 b. Dividend yield: $20,000 / 80,000 = 0.015 $20,000 / 80,000 = 0.019 $16.50 $13 c. Book value per share of common stock:
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This note was uploaded on 03/16/2012 for the course FENS 101 taught by Professor Selçukerdem during the Fall '12 term at Sabancı University.

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Recitation solut-Ch 17 - (15-20 min.) a. E 17-18 Current...

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