Question

Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2019, financial statements:

For the Year Ended December 31, 2019:
Net revenues	$	33,800
Cost of services provided		11,600
Depreciation expense		5,500
Operating income	$	16,700
Interest expense		3,600
Income tax expense		3,200
Net income	$	9,900
At December 31, 2019:
Assets
Cash and short-term investments	$	2,700
Accounts receivable, net		9,900
Property, plant, and equipment, net		87,400
Total assets	$	100,000
Liabilities and Stockholders' Equity
Accounts payable	$	1,600
Income taxes payable		1,500
Notes payable (long term)		54,600
Paid-in capital		13,000
Retained earnings		29,300
Total liabilities and stockholders' equity	$	100,000

At December 31, 2018, total assets were $81,400 and total stockholders' equity was $33,500. There were no changes in notes payable or paid-in capital during 2019.

Required:

1. From the above income statement and balance sheet for Gerrard Construction Co. What other financial statements are required?
2. Indicate the note disclosures that should be provided by Gerrard Construction Co.
3. Assume that the balance of "Accounts Receivable, net" at December 31, 2018, was $8,600. Calculate the following activity measures for Gerrard Construction Co. for the year ended December 31, 2019:
   1. Accounts receivable turnover.
   2. Number of days' sales in accounts receivable.
4. Calculate the following financial leverage measures for Gerrard Construction Co. at December 31, 2019:
   1. Debt ratio.
   2. Debt/equity ratio.
5. Gerrard Construction Co. wishes to lease some new earthmoving equipment from Caterpillar on a long-term basis. What impact (increase, decrease, or no effect) would a capital lease of 4.5 million have on the company's debt ratio and debt/equity ratio?
6. (1) Calculate the amount of dividends declared and paid during the year ended December 31, 2019.
   (2) Review the answer from requirement f1 at this time. Assume that Gerrard Construction Co. had 1,187,000 shares of $1 par value common stock outstanding throughout 2019, and that the market price per share of common stock at December 31, 2019, was $18.77. Calculate the following profitability measures for the year ended December 31, 2019:
   1. Earnings per share of common stock.
   2. Price/earnings ratio.
   3. Dividend yield.
   4. Dividend payout ratio.

Answer 1

		rounded to two decimal
Accounts receivable turnover.	33800/((9900+8600)/2)	3.65
Number of days' sales in accounts receivable.	((9900+8600)/2)/33800*365	99.89
Debt ratio.	(1600+1500+54600)/100000	0.58
Debt/equity ratio.	(1600+1500+54600)/(13000+29300)	1.36
as debt will increase and its in numerator so the debt ratio and debt to equity ratio will increase
1) Dividend 13000+29300-33500	8800	declared and paid
Earnings per share of common stock.	9900000/1187000	8.34
Price/earnings ratio.	MPS/EPS 18.77/8.34	2.25
Dividend yield.	7.41/18.77	0.39	39%
Dividend payout ratio.	8800/9900	0.89	89%
Dividend per share 8800/1187	7.41
If any doubt please comment