$63,000 3. Price-earnings ratio 10 times. EPS = = $2.10; ———— 30,000 $21 = 10 times ——— $2.10 $90,000 4. Acid-test ratio 1.8:1. = 1.8:1 ———— $50,000 $400,000 5. Receivables turnover 10 times. = 10 ——————————— ($50,000 + $30,000) ÷ 2 $63,000 + $27,000 + $18,000 6. Times interest earned 6 times. = 6 ————————————— $18,000 $63,000 7. Profit margin 15.8%. = .158 ———— $400,000 8. Days in inventory 91.3 days. Inventory turnover = $240,000 = 4.0; ——————————— ($50,000 + $70,000) ÷ 2 365 days = 91.3 ———— 4.0 $23,000 9. Payout ratio 36.5%. = .365 ———— $63,000 $63,000 10. Return on assets 14%. = .14 ———————————— ($400,000 + $500,000) ÷ 2
$63,000 3. Price-earnings ratio 10 times. EPS = ———— = $2.10; 30,000 $21 ——— = 10 times $2.10 $90,000 4. Acid-test ratio 1.8:1. ———— = 1.8:1 $50,000 $400,000 5. Receivables turnover 10 times. ——————————— = 10 ($50,000 + $30,000) ÷ 2 $63,000 + $27,000 + $18,000 6. Times interest earned 6 times. ————————————— = 6 $18,000 $63,000 7. Profit margin 15.8%. ———— = .158 $400,000 8. Days in inventory 91.3 days. Inventory turnover = $240,000 ——————————— = 4.0; ($50,000 + $70,000) ÷ 2 365 days ———— = 91.3 4.0 $23,000 9. Payout ratio 36.5%. ———— = .365 $63,000 $63,000 10. Return on assets 14%. ———————————— = .14 ($400,000 + $500,000) ÷ 2
Exercise%2014.docx