Grogan Inc. had the following information available from its 2011 and 2012 financial statements:

Balance sheet information:	2011		2012
Current assets	$ 15,000		$ 20,000
Long-term assets	107,000		207,000
Total assets	$122,000		$227,000
Current liabilities	$ 16,000		$ 11,500
Long-term liabilities	40,000		60,000
Total liabilities	$ 56,000		$ 71,500
Common stock	$ 30,000		$71,750
Retained earnings	36,000		83,750
Total stockholders' equity	$ 66,000		$155,500
Income statement information:
Income before interest and taxes	$ 50,000		$105,000
Interest expense	4,000		6,000
Tax expense	10,000		26,250
Net income	$ 36,000		$72,750
Other information:
Dividends paid to stockholders	$ 0		$25,000
Average income tax rate	20%		25%
Net cash flows from operations	$25,000		$75,000
Cash paid for acquisitions	$10,000		$85,000

Refer to the Grogan Inc. information above. Grogan had an average of 7,000 shares of common stock outstanding during 2012. At the end of the year, the market price per share was $100. The company's price earnings (P/E) ratio for 2012 is: (round to two decimal places)

Select one:

b. 6.67 to 1.

c. 9.62 to 1.

d. 19.44 to 1.

2. Refer to the Grogan Inc. information above. Grogan's debt-to-equity ratio for 2012 is: (round to two decimal places)

Select one:

a. 2.17.

b. 0.46.

c. 0.85.

3. Bernstein Inc. is a local retailer. The following selected information is available from their 2011 and 2012 financial statements:

Accounts receivable at 12/31/11	$ 160,000
Accounts receivable at 12/31/12	240,000
Inventory at 12/31/11	300,000
Inventory at 12/31/12	360,000
Net credit sales for 2012	3,400,000
Cost of goods sold for 2012	1,980,000
Net income for 2012	1,000,000

Refer to the Bernstein Inc. information above. What was Bernstein's number of days sales in receivables for 2012? (round to two decimal places)

Select one:

a. 21.47 days

b. 73.00 days

c. 146.00 days

Refer to the Bernstein Inc. information above. What was Bernstein's inventory turnover ratio for 2012? (round to two decimal places)

Select one:

a. 6.00

b. 3.00

Answer rating: 100% (QA)

Solution PE ratio Market price per share Earnings pe... View the full answer