$1$

Unit $4$ Practice Activity: Financial Report

Analysis $$ Rainbow Paint Co$.$

Note: This is a practice activity to be performed before completing the assignment for this unit.

Also, this is the data to be used as the basis for your Unit $9$ final project. The solutions for the

Unit $4$ practice activity are located here.

Rainbow Paint Co$.\text{'}$s comparative financial statements for the years ending December $31,2013$ and

$2012$ are as follows. The market price of Rainbow Paint Co$.\text{'}$s common stock was $$30$ on December $31,$

$1999$ and $$25$ on December $31,2013.$

Rainbow Paint Co$.$

Comparative Income Statement

For the Years Ended December $31,2013$ and $201220132012$

$20132012$

Sales $ $5,125,000$ $ $3,257,600$

Sales returns and allowances $125,00057,600$

Net sales $ $5,000,000$ $ $3,200,000$

Cost of goods sold $3,400,0002,080,000$

Gross profit $ $1,600,000$ $ $1,120,000$

Selling expenses $650,000464,000$

Administrative expenses $325,000224,000$

Total operating expenses $ $975,000$ $ $688,000$

Income from operations $ $625,000$ $ $432,000$

Other income $25,00019,200$

Income before interest & taxes $ $650,000$ $ $451,200$

Other expense $($interest$)105,00064,000$

Income before income tax $ $545,000$ $ $387,200$

Income tax expense $300,000176,000$

Net income $ $245,000$ $ $211,200$

$2$

Rainbow Paint Co$.$

Comparative Retained Earnings Statement For the Years Ended December $31,2013$ and $2012$

$20132012$

Retained earnings, January $1$ $ $723,000$ $ $581,800$

Add net income for year $245,000211,200$

Total $ $968,000$ $ $793,000$

Deduct dividends: $ $40,000$ $ $40,000$

On preferred stock $45,00030,000$

On common stock

Total $ $85,000$ $ $70,000$

Retained earnings, December $31$ $ $883,000$ $ $723,000$

Paint C$0,$ Comparative Balance Sheet December $31,2013$ and $2012$

Assets $20132012$

Current assets:

Cash $ $175,000$ $ $125,000$

Marketable securities $150,00050,000$

Accounts receivable $($net$)425,000325,000$

Inventories $720,000480,000$

Prepaid expenses $30,00020,000$

Total current assets $ $1,500,000$ $ $1,000,000$

Long$-$term investments $250,000225,000$

Property, plant, and equipment $($net$)2,093,0001,948,000$

Total assets $ $3,843,000$ $ $3,173,000$

Liabilities

Current liabilities $ $750,000$ $ $650,000$

Long$-$term liabilities:

Mortgage note payable, $10\%,$ due $2016$ $ $410,000-$

Bonds payable, $8\%,$ due $2017800,000$ $ $800,000$

Total long$-$term liabilities $ $1,210,000$ $ $800,000$

Total liabilities $ $1,960,000$ $ $1,450,000$

Stockholders' Equity

Preferred $8\%$ stock, $$100$ par $ $500,000$ $ $500,000$

Common stock, $$10$ par $500,000500,000$

Retained earnings $883,000723,000$

Total stockholders' equity $ $1,883,000$ $ $1,723,000$

Total liabilities and stockholders' equity $ $3,843,000$ $ $3,173,000$

Instructions: Determine the following measures for $2013$:

$1.$ 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 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

I need help solving $14,15,16,17,18,$ and $19.$ PLEASE show your work.

Thank you, in advance!!!