Calculating Ratios Below are the financial statements for Mowing and Maintenance, Inc. Pauls Plowing, Inc. Balance Sheet
Question:
Calculating Ratios Below are the financial statements for Mowing and Maintenance, Inc.
Paul’s Plowing, Inc. Balance Sheet as of December 31, 2018 and 2017 (in millions of dollars)
Assets 2018 2017
Cash and marketable
securities $ 140 $ 120
Accounts receivable $240 $230
Inventory $ 500 $425
Total Current Assets $ 880 $ 775
Total assets $2,200 $1,850
Liabilities & Equity 2018 2017
Current liabilities:
Accrued wages and taxes $ 80 $ 90
Accounts payable $ 130 $ 120
Notes payable $240 $210
Total Current Liabilities $ 450 $ 420
Long-term debt: $ 900 $ 750
Fixed assets:
Gross plant and equipment $1,180 $1,005
Less: Depreciation $160 $ 150
Net plant and equipment $1,020 $ 855
Other long-term assets $ 300 $ 220
Total Fixed Assets $1,320 $1,075
Stockholders’ equity:
Preferred stock (5 million shares) $ 10 $ 10
Common stock and paid-in surplus (10 million shares) $200 $ 200
Retained earnings $640 $470
Total Equity $ 850 $ 680
Total liabilities and equity $2,200 $ 1,850
Paul’s Plowing, Inc.
Income Statement for Years Ending December 31, 2018 and 2017
(in millions of dollars)
2018 2017
Net sales (all credit) $ 920 $762
Less: Cost of goods sold $410 $325
Gross profits $510 $437
Less: Depreciation $14 $10
Other operating expenses $30 $25
Earnings before interest and taxes (EBIT) $466 $402
Less: Interest $96 $82
Earnings before taxes (EBT) $370 $320
Less: Taxes $148 $128
Per (common) share data:
Earnings per share (EPS) | $22.00 | $19.00 |
Dividends per share (DPS) | $2.00 | $2.00 |
Book value per share (BVPS) | $ 220.00 | $185.00 |
Market value (price) per share (MVPS) | $275.00 | $237.50 |
e. Fixed asset turnover 2018: 1.25 times
2017: 1.25 times
Net income | $ 222 | $ 192 | |
Less: Preferred stock dividends | $ 2 | $ 2 | |
Net income available to common stockholders | $ 220 | $ 190 | |
Less: Common stock dividends | 20 | 20 | |
Addition to retained earnings | $ 200 | $ 170 | |
f. Total asset turnover 2018: 0.85 times
2017: 0.85 times
g. Debt ratio 2018: 62.5%
2017: 62.5%
h. Times interest earned 2018: 8.50 times
2017: 8.50 times
i. Profit margin 2018: 28.75%
2017: 28.75%
j. ROA 2018: 19.75%
2017: 19.75%
k. ROE 2018: 36.88%
2017: 36.88%
l. Market-to-book ratio 2018: 2.55 times
2017: 2.55 times
m. PE ratio 2018: 15.60 times
2017: 15.60 times
Expert Answer:
a Current Ratio Current Assets Current Liabilities 2017 2018 Current Assets 775 880 Cur... View the full answer
