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Markus Company’s common stock sold for $3.00 per share at the end of this year. The company paid a common stock dividend of $0.48 per share this year. It also provided the following data excerpts from this year’s financial statements:     

	Ending Balance		Beginning Balance
Cash	$	31,000	$	32,200
Accounts receivable	$	64,000	$	53,700
Inventory	$	59,200	$	64,000
Current assets	$	154,200	$	149,900
Total assets	$	490,000	$	506,000
Current liabilities	$	63,000	$	49,500
Total liabilities	$	140,000	$	126,000
Common stock, $1 par value	$	126,000	$	126,000
Total stockholders’ equity	$	350,000	$	380,000
Total liabilities and stockholders’ equity	$	490,000	$	506,000

     

	This Year
Sales (all on account)	$	750,000
Cost of goods sold	$	440,000
Gross margin	$	310,000
Net operating income	$	162,000
Interest expense	$	9,000
Net income	$	107,100

A. What is the earnings per share? (Round your answer to 2 decimal places.)

B. What is the price-earnings ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

C. What is the dividend payout ratio and the dividend yield ratio? (Do not round intermediate calculations. Round your answer to the nearest whole percentage place. i.e., 0.1234 should be considered as 12%.)

D. What is the return on total assets (assuming a 30% tax rate)? (Round percentage answer to 1 decimal place. i.e., 0.123 should be considered as 12.3%)

E. What is the accounts receivable turnover and the average collection period?

F. What is the company’s operating cycle? (Round your intermediate and final answers to 2 decimal places.)      

G. What is the total asset turnover? (Round your answer to 2 decimal places.)      

H. What is the debt-to-equity ratio at the end of this year? (Round your answer to 2 decimal places.)      

Answer 1

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Markus Company
Statement of Earnings	2019			Ans A	2019
Net Sales	750,000.00			Earnings per share	0.85
Cost of goods sold	440,000.00			Net Income/ Number of Common Share
Gross Margin	310,000.00
Net Operating Income	162,000.00			Ans B
Interest Expense	9,000.00			Price Earning Ratio	3.53
Net Income	107,100.00			Market price of common share/ Earnings per share
Statement of Financial Position				Ans C
Assets	Ending	Beginning		Dividend Payout Ratio	56%
Current Assets				Dividend per share/ Earnings per share
Cash	31,000.00	32,200.00
Accounts Receivable	64,000.00	53,700.00		Dividend Yield Ratio	16%
Inventory	59,200.00	64,000.00		Dividend per share/ Market price of common share
Total Current Assets	154,200.00	149,900.00
Total Assets	490,000.00	506,000.00		Ans D
				Return on Total Assets	21.51%
Liabilities & Stockholders' Equity				Net Income/ Average Total Assets
Total Current Liabilities	63,000.00	49,500.00
Total Liabilities	140,000.00	126,000.00		Ans E
Stockholders' Equity				Accounts Receivables Turnover	12.74
Common Stock	126,000.00	126,000.00		Sales Revenue/ Average Accounts Receivable
Total Stockholders' Equity	350,000.00	380,000.00
Total Liabilities & Stockholders' Equity	490,000.00	506,000.00		Average collection period	28.64
				365/ Accounts Receivables Turnover
Market price of common share	3.00
Number of common shares	126,000.00			Ans F
				Operating cycle
Dividend per share	0.48
				Days in Inventory	51.10
				365/ Inventory Turnover
Total Assets	490,000.00	506,000.00
Average Assets	498,000.00			Inventory Turnover	7.14
				Cost of goods sold/ Average Inventory
Accounts Receivable	64,000.00	53,700.00
Average Accounts Receivable	58,850.00			Operating cycle
				Average collection period	28.64
Total Inventory	59,200.00	64,000.00		Add: Days in Inventory	51.10
Average Inventory	61,600.00			Operating cycle	79.74
				Ans G
				Total asset Turnover	1.51
				Sales Revenue/ Average Total Assets
					2.45
				Ans H
				Debt-to-equity ratio	0.40
				Total Liabilities/ Total Stockholders' Equity