Question

Hyrkas Corporation's most recent balance sheet and income statement appear below: Balance Sheet December 31, Year...

Hyrkas Corporation's most recent balance sheet and income statement appear below:

Balance Sheet
December 31, Year 2 and Year 1
(in thousands of dollars)
Year 2 Year 1
Assets
Current assets:
Cash $ 180 $ 250
Accounts receivable, net 280 300
Inventory 250 220
Prepaid expenses 20 20
Total current assets 730 790
Plant and equipment, net 940 980
Total assets $ 1,670 $ 1,770
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 220 $ 250
Accrued liabilities 50 50
Notes payable, short term 40 40
Total current liabilities 310 340
Bonds payable 210 300
Total liabilities 520 640
Stockholders’ equity:
Common stock, $2 par value 200 200
Additional paid-in capital 330 330
Retained earnings 620 600
Total stockholders’ equity 1,150 1,130
Total liabilities & stockholders’ equity $ 1,670 $ 1,770
Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account) $ 1,320
Cost of goods sold 820
Gross margin 500
Selling and administrative expense 395
Net operating income 105
Interest expense 20
Net income before taxes 85
Income taxes (30%) 26
Net income $ 59

Dividends on common stock during Year 2 totaled $39 thousand. The market price of common stock at the end of Year 2 was $14.40 per share.

Required:

Compute the following for Year 2:

a. Gross margin percentage. (Round your answer to 1 decimal place.)

b. Earnings per share. (Round your answer to 2 decimal places.)

c. Price-earnings ratio. (Do not round intermediate calculations. Round your answer to 1 decimal place.)

d. Dividend payout ratio. (Do not round intermediate calculations. Round your "Percentage" answer to 1 decimal place.)

e. Dividend yield ratio. (Round your "Percentage" answer to 2 decimal places.)

f. Return on total assets. (Do not round intermediate calculations. Round your "Percentage" answer to 2 decimal places.)

g. Return on equity. (Round your "Percentage" answer to 2 decimal places.)

h. Book value per share. (Round your answer to 2 decimal places.)

i. Working capital. (Input your answer in thousands of dollars.)

j. Current ratio. (Round your answer to 2 decimal places.)

k. Acid-test (quick) ratio. (Round your answer to 2 decimal places.)

l. Accounts receivable turnover. (Round your answer to 2 decimal places.)

m. Average collection period. (Use 365 days in a year. Do not round intermediate calculations. Round your answer to 1 decimal place.)

n. Inventory turnover. (Round your answer to 2 decimal places.)

o. Average sale period. (Use 365 days in a year. Do not round intermediate calculations. Round your answer to 1 decimal place.)

p. Times interest earned ratio. (Round your answer to 2 decimal places.)

q. Debt-to-equity ratio

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Answer #1

Answer to Part a.

Gross Margin Percentage = Gross Margin/ Net Sales * 100
Gross Margin Percentage = $500/ $1,320 * 100
Gross Margin Percentage = 37.9%

Answer to Part b.

Earnings per Share = Net Income/ Common Stock Outstanding
Common Stock Outstanding = Common Stock/ Par Value
Common Stock Outstanding = $200/ 2 = 100

Earnings per Share = $59/ 100
Earnings per Share = $0.59

Answer to Part 3.

Price- Earnings Ratio = Market Price per share/ Earnings per share
Price- Earnings Ratio = $14.40 / $0.59
Price- Earnings Ratio = 24.4

Answer to Part 4.

Dividend Payout Ratio = Dividend Paid / Net Income * 100
Dividend Payout Ratio = $39/ $59 * 100
Dividend Payout Ratio = 66.1%

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