Comparative financial statements for the Rahul Corporation for the year ended December 31 are given below. A
Question:
Comparative financial statements for the Rahul Corporation for the year ended December 31 are given below. A total of 500,000 shares of common stock were outstanding. The market value of the company’s common stock at the end of the year was $25.
Required
Compute the following financial ratios for the year 2021:
a. Gross margin percentage.
b. Earnings per share.
c. Price–earnings ratio.
d. Return on total assets.
e. Return on common stockholders’ equity.
Comment on the results.
Transcribed Image Text:
Rahul Corporation Comparative Balance Sheet For the Years Ended December 31, 2021, and 2020 (in thousands) 2021 2020 Assets Current assets: Cash $ 2,200 $ 2,470 Accounts receivable net 10,870 7,725 Inventory Prepaid expenses 13,860 12,155 820 620 Total current assets 27,750 22,970 Property and equipment: Land 11,000 11,000 Buildings and equipment, net Total property and equipment 40,400 42,400 51,400 53,400 Total assets $79,150 $76,370 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued expenses Notes payable, short term $20,600 $18,650 780 640 210 Total current liabilities 21,380 19,500 Long-term liabilities: Bonds payable 11,000 11,000 Total liabilities 32,380 30,500 Stockholders' equity: Common stock 13,650 13,650 Retained earnings 33,120 32,220 Total stockholders' equity 46,770 45,870 Total liabilities and stockholders' equity $79,150 $76,370
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a Gross Margin Percentage 27600 84500 3266 b Earnings Per Share 2560000 5...View the full answer
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