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.

 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.)

f) Return on total assets for year 2 = Net income / Average total assets

Average total assets = Beginning assets + Ending assets / 2 = \$1315 + \$1325 /2 = \$1320

Net income = 140

Return on total assets = 140 / 1320 = 0.1

g) Return on common stockholder's equity for year 2 = Net income - Preferred dividends / Average common equity

where, Average common equity = (Beginning common equity + Ending common equity) /2

Beginning common equity = Total equity in year 1 - Preferred equity in year 1= \$755 -\$200 = \$555

Ending common equity = Total equity in year 2 - Preferred equity in year2 P= \$825 -\$200 = \$625

Average common equity = \$555 + \$625 / 2 = \$590

Preferred Dividends = 10% of \$200 = \$20

Return on common stockholder's equity = (\$140 - \$20) / 590 = 0.20

h) Book value per share for year 2 = (Total shareholder's equity - Preferred equity) / Total common shares in year 2

= (\$825 - \$200) / 100 = \$625 / 100 = \$6.25

i) Working capital for year2 = current assets in year 2 - current liabilities in year 2

For year 2, Current assets = \$435, curent liabilities = \$310

Working capital = \$435 - \$310 = \$125

J) Current ratio for year 2 = Current assets in year 2 / current liabilities in year 2

= \$435 / \$310 = 1.4

k) Acid test ratio for year 2 = (Cash + Accounts Receivable) for year 2 / current liabilities for year 2

= \$100 + \$210 / 310 = \$310 / \$310 = 1

l) Accounts receivable turnover ratio for year 2 = Sales / Average accounts receivable

where, average accounts receivable = Beginning accounts receivable + Ending accounts receivable / 2

= \$220 + \$210 / 2 = \$430 / 2= \$215

Accounts receivable turnover ratio = \$1420 / \$215 = 6.60

m) Average collection period for year 2 = 365 / Accounts receivables turnover for year 2

Accounts receivables turnover = 6.60

Average collection period for year 2 = 365 / 6.6

= 55.3

n) Inventory turnover for year 2 = cost of the goods sold for year 2 / Average inventory

where,average inventory == Beginning inventory + Ending inventory / 2

= (\$100 + \$110) / 2 = \$105

Cost of the goods sold = \$874 / \$105 = 8.32

p) Times interest earned for year 2 = Net operating income for year 2 / Interest expense for year 2

= \$255 / 55 = 4.63

q) Debt equity ratio for year 2 = Total liabilities in year 2 / Equity in year 2

= \$500 / \$825 = 0.60