Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear below. The company did not issue any new common or preferred stock during the year. A total of 700 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $1.00. The market value of the company's common stock at the end of the year was $23. All of the company's sales are on account.
Heritage Antiquing Services
Comparative Balance Sheet
(dollars in thousands) |
|
This Year |
Last Year |
| Assets |
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
| Cash |
$ |
1,140 |
|
$ |
1,290 |
|
| Accounts receivable, net |
|
9,800 |
|
|
7,600 |
|
| Inventory |
|
12,600 |
|
|
11,600 |
|
| Prepaid expenses |
|
780 |
|
|
620 |
|
|
|
|
|
|
|
|
| Total current assets |
|
24,320 |
|
|
21,110 |
|
|
|
|
|
|
|
|
| Property and equipment: |
|
|
|
|
|
|
| Land |
|
10,300 |
|
|
10,300 |
|
| Buildings and equipment, net |
|
39,726 |
|
|
36,158 |
|
|
|
|
|
|
|
|
| Total property and equipment |
|
50,026 |
|
|
46,458 |
|
|
|
|
|
|
|
|
| Total assets |
$ |
74,346 |
|
$ |
67,568 |
|
|
|
|
|
|
|
|
| Liabilities and Stockholders' Equity |
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
| Accounts payable |
$ |
18,600 |
|
$ |
18,600 |
|
| Accrued payables |
|
1,070 |
|
|
750 |
|
| Notes payable, short term |
|
190 |
|
|
190 |
|
|
|
|
|
|
|
|
| Total current liabilities |
|
19,860 |
|
|
19,540 |
|
| Long-term liabilities: |
|
|
|
|
|
|
| Bonds payable |
|
9,700 |
|
|
9,700 |
|
|
|
|
|
|
|
|
| Total liabilities |
|
29,560 |
|
|
29,240 |
|
|
|
|
|
|
|
|
| Stockholders' equity: |
|
|
|
|
|
|
| Preferred stock |
|
1,000 |
|
|
1,000 |
|
| Common stock |
|
700 |
|
|
700 |
|
| Additional paid-in capital |
|
4,000 |
|
|
4,000 |
|
|
|
|
|
|
|
|
| Total paid-in capital |
|
5,700 |
|
|
5,700 |
|
| Retained earnings |
|
39,086 |
|
|
32,628 |
|
|
|
|
|
|
|
|
| Total stockholders' equity |
|
44,786 |
|
|
38,328 |
|
|
|
|
|
|
|
|
| Total liabilities and stockholders' equity |
$ |
74,346 |
|
$ |
67,568 |
|
|
|
|
|
|
|
|
|
Heritage Antiquing Services
Comparative Income Statement and Reconciliation
(dollars in thousands) |
|
This Year |
Last Year |
| Sales |
$ |
70,000 |
|
$ |
64,000 |
|
| Cost of goods sold |
|
39,000 |
|
|
41,000 |
|
|
|
|
|
|
|
|
| Gross margin |
|
31,000 |
|
|
23,000 |
|
|
|
|
|
|
|
|
| Selling and administrative expenses: |
|
|
|
|
|
|
| Selling expenses |
|
10,900 |
|
|
10,300 |
|
| Administrative expenses |
|
7,100 |
|
|
6,800 |
|
|
|
|
|
|
|
|
| Total selling and administrative expenses |
|
18,000 |
|
|
17,100 |
|
|
|
|
|
|
|
|
| Net operating income |
|
13,000 |
|
|
5,900 |
|
| Interest expense |
|
970 |
|
|
970 |
|
|
|
|
|
|
|
|
| Net income before taxes |
|
12,030 |
|
|
4,930 |
|
| Income taxes |
|
4,812 |
|
|
1,972 |
|
|
|
|
|
|
|
|
| Net income |
|
7,218 |
|
|
2,958 |
|
| Dividends to preferred stockholders |
|
60 |
|
|
370 |
|
|
|
|
|
|
|
|
| Net income remaining for common stockholders |
|
7,158 |
|
|
2,588 |
|
| Dividends to common stockholders |
|
700 |
|
|
700 |
|
|
|
|
|
|
|
|
| Net income added to retained earnings |
|
6,458 |
|
|
1,888 |
|
| Retained earnings, beginning of year |
|
32,628 |
|
|
30,740 |
|
|
|
|
|
|
|
|
| Retained earnings, end of year |
$ |
39,086 |
|
$ |
32,628 |
|
|
|
|
|
|
|
|
|
| Required: |
|
Compute the following financial ratios for common stockholders for this year:
|
| 1. |
Gross margin percentage. (Round your answer to 1 decimal place.)
|
| Gross margin percentage |
% |
|
2.
|
Earnings per share of common stock. (Round your answer to 2 decimal places.)
|
|
3.
|
Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.)
|
| Price-earnings ratio |
times |
|
4.
|
Dividend payout ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.)
|
|
5.
|
Dividend yield ratio. (Round your answer to 1 decimal place.)
|
|
6.
|
Return on total assets. (Round your intermediate calculations to whole numbers and final answer to 1 decimal place.)
|
|
7.
|
Return on common stockholders' equity. (Round your intermediate calculations to whole numbers and final answer to 1 decimal place.)
|
| Return on common stockholders' equity |
% |
|
8.
|
Book value per share. (Round your answer to 2 decimal places.)
|