Question

I need help on the problems I got wrong.

The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $67 on December 31, 2016 Blige Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2016 and 2015 2016 2015 $2,398,100 Retained earnings, January 1 $2,823,100 Add net income for year 660,000 491,200 Total $3,483,100 $2,889,300 Deduct dividends On preferred stock $8,400 $8,400 57,800 57,800 On common stock Total $66,200 $66,200 $3,416,900 $2,823,100 Retained earnings, December 31 Blige Inc. Comparative Income Statement For the Years Ended December 31, 2016 and 2015 2016 2015 Sales $3,829,650 $3,523,300 19,050 Sales returns and allowances 12,380 Sales $3,810,600 $3,510,920 1,249,180 Cost of goods sold 1,357,800 $2,452,800 Gross profit $2,261,740 $820,750 Selling expenses $1,018,650 598,250 Administrative expenses 699,150 Total operating expenses 1,519,900 1,616,900 Income from operations $932,900 $644,840 Other income 49,100 41,160 $686,000 $982,000 Other expense (interest) 232,000 128,000 Income before income tax $750,000 $558,000 Income tax expense 90,000 66,800 $660,000 $491,200 Net income Blige Inc. Comparative Balance Sheet December 31, 2016 and 2015 Dec. 31, 2016 Dec. 31, 2015 Assets Current assets $732,880 Cash $479,860 726,270 Temporary investments 1,214,480 678,900 635,100 Accounts receivable (net) Inventories 511,000 394,200 Prepaid expenses 90,778 146,580 Total current assets $2,486,808 $3,123,240 Long-term investments 2,777,612 1,623,412 Property, plant, and equipment (net) 3,190,000 2,871,000 $8,454,420 $7,617,652 Total assets Liabilities Current liabilities $857,520 $1,914,552 Long-term liabilities Mortgage note payable, 8%, due 2021 $1,300,000 $0 Bonds payable, 8%, due 2017 1,600,000 1,600,000 Total long-term liabilities $2,900,000 $1,600,000 Total liabilities $3,757,520 $3,514,552 Stockholders' Equity $600,000 $600,000 Preferred $0.7 stock, $50 par 680,000 Common stock, $10 par 680,000 Retained earnings 3,416,900 2,823,100 Total stockholders' equity $4,696,900 $4,103,100 $8,454,420 $7,617,652 Total liabilities and stockholders' equity Determine the following measures for 2016, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year 1,629,28V 1. Working capital 2.90 2. Current ratic 3. Quick ratio 2.19820 X 4. Accounts receivable turnover 5.8 65 X days 5. Number of days' sales in receivables 6. Inventory turnover 3 7. Number of days' sales in inventory 121.667X days 8. Ratio of fixed assets to long-term liabilities 2.05779 X 0.8 9. Ratio of liabilities to stockholders' equity 10. Number of times interest charges are earned 4.232 X 11. Number of times preferred dividends are earned 78.57 X 12. Ratio of sales to assets 0.4507X 12,2191 x % 13. Rate earned on total assets 14. Rate earned on stockholders' equity 15. Rate earned on common stockholders' equity 0.9705 X % 16. Earnings per share on common stock 9.705 X 6.90 V 17. Price-earnings ratio 18. Dividends per share of common stock 0.85 1.2681 x % 19. Dividend yield

Answer 1

Answer of Part 3:

Quick Ratio = (Current Assets – Inventories – Prepaid Expenses) / Current Liabilities
Quick Ratio = ($2,486,808 - $511,000 - $90,778) / $857,520
Quick Ratio = $1,885,030 / $857,520
Quick Ratio = 2.2:1

Answer of Part 5:

Accounts Receivable Turnover = 5.8 times

Number of Days Sales in receivable = 365 days / Accounts Receivable Turnover
Number of Days Sales in receivable = 365 / 5.8
Number of Days Sales in receivable = 62.9 or 63 days

Answer of Part 7:

Inventory Turnover = 3 times

Number of Days Sales in Inventory = 365 days / Inventory Turnover
Number of Days Sales in Inventory = 365 / 3
Number of Days Sales in Inventory = 121.7 days

Answer of Part 8:

Fixed Assets = $3,190,000

Ratio of Fixed Assets to long term liabilities = Fixed Assets / Long term Liabilities
Ratio of Fixed Assets to long term liabilities = $3,190,000 / $2,900,000
Ratio of Fixed Assets to long term liabilities = 1.1

Answer of Part 10:

Number of Times interest charges are earned = Income from Operations / Interest Expense
Number of Times interest charges are earned = $932,900 / $232,000
Number of Times interest charges are earned = 4.0