CHAPTER 7 ANALYZING COMMON STOCKS about these n about the company. Jack prefers I ca vole things! Anytime I plan 293 to invest in a stock, you can bet I'm going to learn as reports from his such services for years.) to compute his own ratios even though he could ea broker at no cost. (In fact, Bob Smith, his broker, has been much as h Chemical Con Not long ago, he received a copy of the firm's latest financial statements decided to take a closer look at theco as been keeping an eye on a small chemical stock. The firm, South Hlairs the fertilizer businesswhich is something Jack knows a a lot about. (summarized here) and South Plains Chemical Company Balance Sheet 15 thousandsl Cash 1,250 s 8,000 Accounts receivable Current lisbiie 12000 Long-term debt Current assets Fixed and other assets Total assets 8,000 $21,250 s 8,750 Stockholders' equity Total liabilities and 530,000 South Plains Chemical Company Income Statement (S s thousands Sales Cost of goods sold Operating expenses Operating profit Interest expense Taxes Net profit Dividends paid to common stockholders $50,000 $10,000 $ 2,500 1,250 (S in thousands) Number of common shares outstanding Recent market price of the common stock S 25 Questions a. Using the South Plains Chemical Company figures, compute the following ratios Latest Industry Averages Latest Industry Averages Profitability h. Net profit margin i. Return on assets j. ROE Liquidity a. Net working capital b. Current ratio Activity c. Receivables turnover d. Inventory turnover e. Total asset turnover Leverage f. Debt-equity ratio g. Times interest earned 5.96 4.50 $2.00 k Earnings per share L Price-to-earnings ratio m. Dividends per share n. Dividend yield o. Payout ratio p.Book value per share q. Price-to-book-value ratio 0.45 6.75