Question

19. Make up your own data in the following format, and use the data to calculate the amounts in parts a), b), c), d) and e): Current Assets: Current Liabilities: Total Liabilities: Total Stockholders' Equity: Net Income (2020, current year): Net Income (2019, previous year): Preferred Dividends (current): Common Stock Outstanding (current): Common Stock Market Price (current): $???,??? $???,??? $???,??? $???,??? $???,??? $???,??? $??,??? ???,??? shares $??.00 per share Calculate the following (round to nearest 0.00): a) Ratio of Liabilities to Stockholders' Equity: b) Current Ratio: c) Earnings per Share on Common Stock (EPS): d) Price Earnings (PE) Ratio: e) Percentage increase or decrease) in Net Income from 2019 to 2020:

Answer 1

Current Assets	$200,000
Current Liabilities	$100,000
Total Liabilities	$500,000
Total stockholder's equity	$400,000
Net income(2020,current year)	$80,000
Net income(2019,previous year)	$60,000
Preferred dividends (current)	$10,000
Common stock outstanding (current)	$30,000
Common stock market price (current)	$120

a) Ratio of liabilities to stockholder's equity = 100000/400000 = 0.25

b) Current ratio = current assets/ current liabilities = 200000/100000 = 2.00

c) EPS on common stock = (Net income - Preferred dividends)/common stock outstanding

= (80000-10000)/30000 = 2.33

d) Price earnings ratio = 120/2.33 = 51.50

e) Percentage increase/(decrease) in net income from 2019 to 2020 =[ (80000-60000)/60000 ]*100 = 33.33%