Question

Hyrkas Corporation's most recent balance sheet and income statement appear below:        Statement of Financial Position...

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

    

  Statement of Financial Position
December 31, Year 2 and Year 1
(in thousands of dollars)
Year 2 Year 1
  Asset:
  Current assets:
  Cash $ 100 $ 110
  Accounts receivable 210 220
  Inventory 110 100
  Prepaid expenses 15 15
  Total current assets 435 445
  Plant and equipment, net 890 870
  Total assets $ 1,325 $ 1,315
  Liabilities and stockholders' equity:
  Current liabilities:
  Accounts payable $ 160 $ 150
  Accrued liabilities 50 50
  Notes payable, short term 100 110
  Total current liabilities 310 310
  Bonds payable 190 240
  Total liabilities 500 550
  Stockholders' equity:
  Preferred stock, $100 par value, 10% 200 200
  Common stock, $1 par value 100 100
  Additional paid-in capital--common stock 110 110
  Retained earnings 415 345
  Total stockholders' equity 825 755
  Total liabilities and stockholders' equity $ 1,325 $ 1,305


Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
  Sales (all on account) $ 1,420
  Cost of goods sold 874
  Gross margin 546
  Selling and administrative expenses 291
  Net operating income 255
  Interest expense 55
  Net income before taxes 200
  Income taxes (30%) 60
  Net income $ 140

       

Dividends on common stock during Year 2 totaled $50 thousand. The market price of common stock at the end of Year 2 was $9.26 per share.

    

Required:
a.

Compute the gross margin percentage for Year 2.(Round your answer to 2 decimal place.)

  
      

b.

Compute the earnings per share (of common stock) for Year 2.(Round your answer to 2 decimal places.)

  
      

c.

Compute the price-earnings ratio for Year 2.(Do not round intermediate calculations. Round your answer to 2 decimal place.)

  
      

d.

Compute the dividend payout ratio for Year 2. (Do not round intermediate calculations. Round your answer to 1 decimal place.)

  
      

e.

Compute the dividend yield ratio for Year 2.(Round your answer to 2 decimal places.)

  
      

f.

Compute the return on total assets for Year 2.(Do not round intermediate calculations. Round your answer to 2 decimal places.)

  
      

g.

Compute the return on common stockholders' equity for Year 2. (Round your answer to 2 decimal places.)

  
      

h.

Compute the book value per share for Year 2. (Round your answer to 2 decimal places.)

  
      

i.

Compute the working capital for Year 2. (Input your answer in thousands of dollars.)

  
      

j.

Compute the current ratio for Year 2. (Round your answer to 2 decimal places.)

  
      

k. Compute the acid-test ratio for Year 2.(Round your answer to 2 decimal place.)

  
      

l. Compute the accounts receivable turnover for Year 2. (Round your answer to 2 decimal places.)

  
      

m.

Compute the average collection period for Year 2. (Use 365 days in a year. Do not round intermediate calculations. Round your answer to one decimal place.)

  
      

n.

Compute the inventory turnover for Year 2. (Round your answer to 2 decimal places.)

  
      

o.

Compute the average sale period for Year 2. (Use 365 days in a year. Do not round intermediate calculations. Round your answer to 2 decimal place.)

  
      

p.

Compute the times interest earned for Year 2. (Round your answer to 2 decimal places.)

  
      

q.

Compute the debt-to-equity ratio for Year 2. (Round your answer to 2 decimal places.)

  
      

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Homework Answers

Answer #1

Answer to Part a.

Gross Margin percentage = Gross Margin / Net Sales * 100
Gross Margin percentage = 546 / 1,420 * 100
Gross Margin percentage = 38.45%

Answer to Part b.

Earning per Share = (Net Income – Preferred Dividend) / Average Common Stock Outstanding

No. of Stock Outstanding in Year 1 = 100 / 1 = 100 shares
No. of Stock Outstanding in Year 2 = 100 / 1 = 100 shares
Average Common Stock Outstanding = (100 + 100) / 2 = 100 shares
Preferred Dividend = $200 * 10% = $20

Earning per Share = (140 – 20) / 100
Earning per Share = $1.20

Answer to Part c.

Price-Earnings Ratio = Price per Share/ Earning per Share
Price-Earnings Ratio = 9.26 / 1.20
Price-Earnings Ratio = 7.72 times

Answer to Part d.

Dividend Payout Ratio = Dividend per Share / Earning per Share * 100
Dividend per share = 50 / 100 = $0.50
Dividend Payout Ratio = 0.50 / 1.20 * 100
Dividend Payout Ratio = 41.67%

Answer to Part e.

Dividend Yield Ratio = Dividend per Share / Market price per Share * 100
Dividend Yield Ratio = 0.50 / 9.26 * 100
Dividend Yield Ratio = 5.40%

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