Question

Markus Company's common stock sold for $2.75 per share at the end of this year. The company paid a common stock dividend of $0.55 per share this year. It also provided the following data excerpts from this year's financial statements: Ending Beginning Balance Balance Cash $ 35,000 $ 30,000 Accounts receivable $ 60,000 $ 50,000 Inventory $ 55,000 $ 60,000 Current assets $ 150,000 $ 140,000 Total assets $ 450,000 $ 460,000 Current liabilities $ 60,000 $ 40,000 Total liabilities $ 130,000 $ 120,000 Common stock, $1 par value $ 120,000 $ 120,000 Total stockholders' equity $ 320,000 $ 340,000 Total liabilities and stockholders' equity $ 450,000 $ 460,000 Sales (all on account) Cost of goods sold Gross margin Net operating income Interest expense Net income This Year $ 700,000 $ 400,000 $ 300,000 $ 140,000 $ 8,000 $ 92,400

Answer 1

4) Return on total assets:
Net Income (a)	$92,400
Average Total Assets (b) ($460,000 + $450,000/2)	$455,000
Return on total assets (a/b*100)	20.3%
6) Book value per share:
Total Shareholders' Equity (a)	$320,000
Number of Common Shares (b) ($120,000/$1)	120,000
Book value per share (a/b)	$2.67
7) Working capital:
Total current assets (a)	$150,000
Total current liabilities (b)	$60,000
Working capital (a-b)	$90,000
Current ratio:
Total current assets (a)	$150,000
Total current liabilities (b)	$60,000
Current ratio (a/b)	2.50
8) Acid-test ratio:
Total current assets	$150,000
Less: Inventory	($55,000)
Total Quick Assets (a)	$95,000
Total current liabilities (b)	$60,000
Acid-test Ratio or Quick Ratio (a/b)	1.58

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