The comparative financial statements of Bettancort Inc. are as follows. The market price
of Bettancort Inc. common stock was $71.25 on December 31, 2014.
Bettancort Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2014 and 2013
2014 2013
Retained earnings, January 1 . . . $2,655,000 $2,400,000
Add net income for year . . . . . . . . 300,000 280,000
Total . . . . . . . . . . . . . . . . . . . . . . . $2,955,000 $2,680,000
Deduct dividends:
On preferred stock . . . . . . . . . . . . .$ 15,000 $ 15,000
On common stock. . . . . . . . . . . . . . 10,000 10,000
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000 $ 25,000
Retained earnings, December 31 . . . . . . . . . . . . .........................................................$2,930,000 $2,655,000
Bettancort Inc.
Comparative Income Statement
For the Years Ended December 31, 2014 and 2013
2014 2013
Sales (all on account) . . . . . . . . $1,212,000 $1,010,000
Sales returns and allowances . . . .12,000 10,000
Net sales. . . . . . . . . . . . . . . . . . . .$1,200,000 $1,000,000
Cost of goods sold. . . . . . . . . . . . .500,000 475,000
Gross profit . . . . . . . . . . . . . . . . . .$ 700,000 $ 525,000
Selling expenses . . . . . . . . . . . . . $ 240,000 $ 200,000
Administrative expenses . . . . . . . 180,000 150,000
Total operating expenses . . . . . $ 420,000 $ 350,000
Income from operations . . . . . . .$ 280,000 $ 175,000
Other income . . . . . . . . . . . . . . . . . 166,000 225,000
Other expense (interest) . . . . . . . . . .66,000 60,000
Income before income tax . . . . . . . $ 380,000 $ 340,000
Income tax expense . . . . . . . . . . . . . . 80,000 60,000
Net income . . . . . . . . . . . . . . . . . . . $ 300,000 $ 280,000
Bettancort Inc.
Comparative Balance Sheet
December 31, 2014 and 2013
Dec. 31, 2014 Dec. 31, 2013
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . 450,000 $ 400,000
Marketable securities. . . . . .300,000 260,000
Accounts receivable (net) . .130,000 110,000
Inventories . . . . . . . . . . . . . . . 67,000 58,000
Prepaid expenses . . . . . . . . . 153,000 139,000
Total current assets . . . . . . $1,100,000 $ 967,000
Long-term investments . . . 2,350,000 2,200,000
Property, plant, and equipment (net) . . . . . . . . . . . . . .................................................1,320,000 1,188,000
Total assets . . . . . . . . . . . . .$4,770,000 $4,355,000
Liabilities
Current liabilities . . . . . . . . . . $440,000 $ 400,000
Long-term liabilities:
Mortgage note payable, 8%, due 2019 . . . . . . . . . . . ...................................................$ 100,000 $ 0
Bonds payable, 10%, due 2015 . . . . . . . . . . . . . . . . . ...................................................1,000,000 1,000,000
Total long-term liabilities . . . $1,100,000 $1,000,000
Total liabilities . . . . . . . . . . . . $1,540,000 $1,400,000
Stockholders' Equity
Preferred $0.75 stock, $10 par .......................................................$ 200,000 $ 200,000
Common stock, $10 par. . . . . . . . .100,000 100,000
Retained earnings . . . . . . . . . . . 2,930,000 2,655,000
Total stockholders' equity . . . .$3,230,000 $2,955,000
Total liabilities and stockholders' equity . . . . . . . . . . . .......................................................$4,770,000 $4,355,000
Instructions
Determine the following measures for 2014, rounding to one decimal place:
1. Working capital
2. Current ratio
3. Quick ratio
4. Accounts receivable turnover
5. Number of days' sales in receivables
6. Inventory turnover
7. Number of days' sales in inventory
8. Ratio of fixed assets to long-term liabilities
9. Ratio of liabilities to stockholders' equity
10. Number of times interest charges are earned
11. Number of times preferred dividends are earned
12. Ratio of net sales to assets
13. Rate earned on total assets
14. Rate earned on stockholders' equity
15. Rate earned on common stockholders' equity
16. Earnings per share on common stock
17. Price-earnings ratio
18. Dividends per share of common stock
19. Dividend yield