Comparative financial statement data of Avenger Hardware Ltd. are as follows: Other information: Market price of
Question:
Comparative financial statement data of Avenger Hardware Ltd. are as follows:
Other information:
• Market price of Avenger Hardware Ltd. common shares: $19.00 at December 31, 2014, and $31.00 at December 31, 2013.
• Weighted-average number of common shares outstanding: 15,000 during 2014 and 12,000 during 2013.
• There are 2,000 preferred shares outstanding.
• All sales are on credit.
Required
1. Compute the following ratios for 2014 and 2013:
a. Current ratio
b. Inventory turnover
c. Accounts-receivable turnover
d. Times-interest-earned ratio
e. Return on assets
f. Return on common shareholders’ equity
g. Earnings per common share
h. Price/earnings ratio
i. Book value per common share at year end
2. Decide (a) whether Avenger Hardware Ltd.’s ability to pay its debts and to sell inventory improved or deteriorated during 2014 and (b) whether the investment attractiveness of its common shares appears to have increased or decreased.
3. How will what you have learned in this problem help you evaluate an investment?
Step by Step Answer:
Accounting
ISBN: 978-0132690089
9th Canadian Edition volume 2
Authors: Charles T. Horngren, Walter T. Harrison Jr., Jo Ann L. Johnston, Carol A. Meissner, Peter R. Norwood