Gibson Company's income statement information follows: Net sales Income before interest and taxes Net income after...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Gibson Company's income statement information follows: Net sales Income before interest and taxes Net income after taxes Interest expense Stockholders' equity, December 31 (Year 1: $190,000) Common stock, December 31 Year 3 $417,000 118,000 55,160 9,200 301,000 192,500 Year 2 $252,000 78,000 63,800 7,900 229,000 172,500 The average number of shares outstanding was 7,700 for Year 3 and 6,900 for Year 2. Required Compute the following ratios for Gibson for Year 3 and Year 2. a. Number of times interest was earned. (Round your answers to 2 decimal places.) b. Earnings per share based on the average number of shares outstanding. (Round your answers to 2 decimal places.) c. Price-earnings ratio (market prices: Year 3, $66 per share; Year 2, $73 per share).(Round your intermediate and final answers to 2 decimal places.) d. Return on average equity. (Round your percentage answers to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).) e. Net margin. (Round your percentage answers to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).) Year 3 Year 2 a. Times interest eamed times times b. Earnings per share c Price-earnings ratio d. Return on average equity times times e. Net margin Gibson Company's income statement information follows: Net sales Income before interest and taxes Net income after taxes Interest expense Stockholders' equity, December 31 (Year 1: $190,000) Common stock, December 31 Year 3 $417,000 118,000 55,160 9,200 301,000 192,500 Year 2 $252,000 78,000 63,800 7,900 229,000 172,500 The average number of shares outstanding was 7,700 for Year 3 and 6,900 for Year 2. Required Compute the following ratios for Gibson for Year 3 and Year 2. a. Number of times interest was earned. (Round your answers to 2 decimal places.) b. Earnings per share based on the average number of shares outstanding. (Round your answers to 2 decimal places.) c. Price-earnings ratio (market prices: Year 3, $66 per share; Year 2, $73 per share).(Round your intermediate and final answers to 2 decimal places.) d. Return on average equity. (Round your percentage answers to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).) e. Net margin. (Round your percentage answers to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).) Year 3 Year 2 a. Times interest eamed times times b. Earnings per share c Price-earnings ratio d. Return on average equity times times e. Net margin
Expert Answer:
Answer rating: 100% (QA)
Year 3 Year 2 a Times interest earned b Earnings per share c Priceearning ratio d Retu... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
Posted Date:
Students also viewed these accounting questions
-
Compute the weighted-average number of shares outstanding for Troy Company, which has a simple capital structure, assuming that the following transactions in common stock occurred during the...
-
The ABC Co. earned $10 million before interest and taxes on revenue of $60 million last year. Investment in fixed capital was $12 million, and depreciation was $8 million. Working capital investment...
-
For 7a-c, use u1= 4. Round your answers to the nearest thousandth. a. For a geometric series with r = 0.7, find S10 and S40. b. For r = 1.3, find S10 and S40. c. For r = 1, find S10 and S40. d. Graph...
-
You are the manager of a local coffee shop. There are two types of customers in your market, coffee addicts, and casual drinkers. Because coffee addicts buy large amounts of coffee, they are more...
-
Smit Corporation is considering implementation of a JIT inventory system. The companys industrial engineer recently conducted a study to determine the average number of days spent in each activity of...
-
Suppose that a firm has a budget of $30,000, that the wage rate is $10 per hour, and that the rental rate of capital is $100 per hour. If the wage rate increases to $15 per hour and the rental rate...
-
Presented below are summary financial data from the 2017 annual report of Natalie Company. Using the ratio definitions, calculate the following financial ratios: unlevered return on sales, asset...
-
Now assume that a court finds that the new rule is merely interpretive. What effect would this determination have on whether the SEC had to follow the APAs rulemaking procedures? Assume that the...
-
Evander Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the tota cost. The data for various levels of production are as follows:...
-
The CEO of Kuehner Development Co. has just come from a meeting with his marketing staff where he was given the latest market study of a proposed new shopping center, Parker Road Plaza. The study...
-
3. In the following normal-form game, what strategies survive iterated elimination of strictly dominated strategies? What are the pure-strategy Nash equilibria? Player 2 L C R T (2,0) (1,1) (4,2)...
-
Draw sketches of the functions described as accurately as possible. (7 points each) a function with a negative leading coefficient and zeros -7, -1, and 8 with multiplicities of 1, 2, and 3...
-
Describe two corporate social responsibility initiatives that Cambridge College (Boston) could adopt. Explain in details.
-
REN 20 On June 30, Sharper Corporation's stockholders' equity section of its balance sheet appears as follows before any stock dividend or split. Sharper declares and immediately distributes a 50%...
-
A regional electrical distributor currently has 1,000 customers who buy an average of $5,000 per year, generating a 50% margin. From experience, the company knows that 20% of its customers will not...
-
Locklear Partners started a new business on July 1, 2021. That same day, Locklear Partners also received $90,000 of cash from issuing common stock and borrowed $80,000 from a friend. On July 1, 2021...
-
What should a multinational company seek in an alliance partner? Name and explain at least three (3) important considerations. (15 points) 7 A BII !!! EE
-
A parking lot charges $3 for the first hour (or part of an hour) and $2 for each succeeding hour (or part), up to a daily maximum of $10. (a) Sketch a graph of the cost of parking at this lot as a...
-
Franklin Templeton has just invested $9,260 for his son (age one). This money will be used for his sons education 18 years from now. He calculates that he will need $71,231 by the time the boy goes...
-
In March 2010, Hertz Pain Relievers bought a massage machine that provided a return of 8 percent. It was financed by debt costing 7 percent. In August 2010, Mr. Hertz came up with a heating compound...
-
When returns from a project can be assumed to be normally distributed, such as those shown in Figure (represented by a symmetrical, bell-shaped curve), the areas under the curve can be determined...
-
Young Company sells an electric timer that carries a 3-month unconditional warranty against product failure. Based on a reliable statistical analysis, Young knows that between the sale and the end of...
-
Navarro, Inc., issued \(\$ 250,000\) of eight percent, 20 -year bonds at 98 on June 30, 2012. Interest is payable semiannually on December 31 and June 30. Through June 30, 2018, Navarro amortized...
-
Determine which of the following transactions represent contingent liabilities for June Leasing and indicate the proper accounting treatment at the company's fiscal year-end, by placing the letter of...
Study smarter with the SolutionInn App