Question

Ratios Compared with Industry Averages Packard Plastics, Inc., manufactures various plastic and synthetic products. Financial statement data for the firm follow: 2013 (Thousands of Dollars, Except Earnings per Share) Sales revenue $1,059,500 Cost of goods sold 540,000 Net income 65,650 Dividends 18,200 Earnings per share 4.04 Packard Plastics, inc. Balance Sheets (Thousands of Dollars) Dec. 31, 2013 Dec. 31, 2012 Assets Cash $5,330 $2,700 Accounts receivable (net) 86,970 60,900 Inventory 192,400 140,000 Total Current Assets 219,000 203,600 Plant assets (net) 215,000 194,000 Other assets 5,300 3,900 Total Assets $439,300 $401,500 Liabilities and Stockholders' Equity Notes payable-banks $40,300 $25,000 Accounts payable 35,880 23,000 Accrued liabilities 32,630 24,800 Total Current Liabilities 83,700 72,800 10% Bonds payable 150,000 150,000 Total Liabilities 233,700 222,800 Common stock $10 par value (12,500,000 shares) 125,000 125,000 Retained earnings 80,600 53,700 Total Stockholders' Equity 205,600 178,700 Total Liabilities and Stockholders' Equity $439,300 $401,500

Answer 1

Answering the questions/requirements whose answers are marked incorrect in the question:

Answer (a)1:

Quick ratio 1.10

Working:

Quick ratio = (Cash + Account receivable) / Current receivables = (5330 + 86970) / 83700 = 1.10

Answer (b):

Dividend per share of common stock $ 1.96

Dividend per share of common stock = 18200 / 12500 = $1.46

Dividend payout ratio | 27.72 %

Dividend payout ratio = Dividend / Net Income = 18200 /65650 *100 = 27.72%

Answer (c):

Price Earning ratio

Price earning ratio = Market price / EPS = 46.75 / 4.04 = 11.57

Dividend yield 3.12% 3.12 %

Dividend yield = Dividend per share / Year end price = 1.46 / 46.75 * 100 = 3.12%