The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $63 on December 31, 2012.
| Blige Inc. | ||||
| Comparative Retained Earnings Statement | ||||
| For the Years Ended December 31, 2012 and 2011 | ||||
| 2012 | 2011 | |||
| Retained earnings, January 1 | $1,262,100 | $1,067,600 | ||
| Add net income for year | 300,000 | 218,700 | ||
| Total | $1,562,100 | $1,286,300 | ||
| Deduct dividends: | ||||
| On preferred stock | $9,800 | $9,800 | ||
| On common stock | 14,400 | 14,400 | ||
| Total | $24,200 | $24,200 | ||
| Retained earnings, December 31 | $1,537,900 | $1,262,100 | ||
| Blige Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31, 2012 and 2011 | ||||
| 2012 | 2011 | |||
| Sales | $1,787,170 | $1,644,200 | ||
| Sales returns and allowances | 8,890 | 5,780 | ||
| Net sales | $1,778,280 | $1,638,420 | ||
| Cost of goods sold | 613,200 | 564,140 | ||
| Gross profit | $1,165,080 | $1,074,280 | ||
| Selling expenses | $392,700 | $490,010 | ||
| Administrative expenses | 334,530 | 287,790 | ||
| Total operating expenses | 727,230 | 777,800 | ||
| Income from operations | $437,850 | $296,480 | ||
| Other income | 23,050 | 18,920 | ||
| $460,900 | $315,400 | |||
| Other expense (interest) | 120,000 | 66,400 | ||
| Income before income tax | $340,900 | $249,000 | ||
| Income tax expense | 40,900 | 30,300 | ||
| Net income | $300,000 | $218,700 | ||
| Blige Inc. | |||||
| Comparative Balance Sheet | |||||
| December 31, 2012 and 2011 | |||||
| Dec. 31, 2012 | Dec. 31, 2011 | ||||
| Assets | |||||
| Current assets: | |||||
| Cash | $288,770 | $300,730 | |||
| Temporary investments | 437,050 | 498,350 | |||
| Accounts receivable (net) | 328,500 | 306,600 | |||
| Inventories | 248,200 | 189,800 | |||
| Prepaid expenses | 54,632 | 60,150 | |||
| Total current assets | $1,357,152 | $1,355,630 | |||
| Long-term investments | 754,858 | 195,781 | |||
| Property, plant, and equipment (net) | 1,950,000 | 1,755,000 | |||
| Total assets | $4,062,010 | $3,306,411 | |||
| Liabilities | |||||
| Current liabilities | $424,110 | $614,311 | |||
| Long-term liabilities: | |||||
| Mortgage note payable, 8%, due 2017 | $670,000 | $0 | |||
| Bonds payable, 8%, due 2021 | 830,000 | 830,000 | |||
| Total long-term liabilities | $1,500,000 | $830,000 | |||
| Total liabilities | $1,924,110 | $1,444,311 | |||
| Stockholders’ Equity | |||||
| Preferred $0.70 stock, $20 par | $280,000 | $280,000 | |||
| Common stock, $10 par | 320,000 | 320,000 | |||
| Retained earnings | 1,537,900 | 1,262,100 | |||
| Total stockholders’ equity | $2,137,900 | $1,862,100 | |||
| Total liabilities and stockholders’ equity | $4,062,010 | $3,306,411 | |||
Instructions:
Determine the following measures for 2012, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Assume 365 days a year.
| 1. Working capital: | $ | |
| 2. Current ratio: | ||
| 3. Quick ratio: | ||
| 4. Accounts receivable turnover: | ||
| 5. Number of days’ sales in receivables: | ||
| 6. Inventory turnover: | ||
| 7. Number of days’ sales in inventory: | ||
| 8. Ratio of fixed assets to long-term liabilities: | ||
| 9. Ratio of liabilities to stockholders’ equity: | ||
| 10. Number of times interest charges are earned: | ||
| 11. Number of times preferred dividends earned: | ||
| 12. Ratio of net sales to assets: | ||
| 13. Rate earned on total assets: | % | |
| 14. Rate earned on stockholders’ equity: | % | |
| 15. Rate earned on common stockholders’ equity: | % | |
| 16. Earnings per share on common stock: | $ | |
| 17. Price-earnings ratio: | ||
| 18. Dividends per share of common stock: | $ | |
| 19. Dividend yield: | % |
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