Problem - Condensed balance sheet and income statement data for Jernigan Corporation
| JERNIGAN Balance Sheets December 31 |
|
2014 |
2013 |
2014 |
| Cash |
$30,000 |
$20,000 |
$18,000 |
| Accounts receivable (net) |
50,000 |
45,000 |
48,000 |
| Other current assets |
90,000 |
95,000 |
64,000 |
| Investments |
55,000 |
70,000 |
45,000 |
| Plant and equipment (net) |
500,000 |
370,000 |
358,000 |
|
$725,000 |
$600,000 |
$533,000 |
| Current liabilities |
$85,000 |
$80,000 |
$70,000 |
| Long-term debt |
145,000 |
85,000 |
50,000 |
| Common stock, $10 par |
320,000 |
310,000 |
300,000 |
| Retained earnings |
175,000 |
125,000 |
113,000 |
|
$725,000 |
$600,000 |
$533,000 |
| JERNIGAN CORPORATION Income Statements For the Years Ended December 31 |
|
2014 |
2013 |
| Sales revenue |
$740,000 |
$600,000 |
| Less: Sales returns and allowances |
40,000 |
30,000 |
| Net sales |
700,000 |
570,000 |
| Cost of goods sold |
425,000 |
350,000 |
| Gross profit |
275,000 |
220,000 |
| Operating expenses (including income taxes) |
180,000 |
150,000 |
| Net income |
$95,000 |
$70,000 |
Additional information:
1. The market price of Jernigan's common stock was $7.00, $7.50, and $8.50 for 2012, 2013, and 2014 respectively.
2. You must compute dividends paid. All dividends were paid in cash.
Instructions-
(A) Compute the following ratios for 2013 and 2014.
i) Profit margin
ii) Gross profit rate
iii) Asset turnover
iv) Earnings per share
v) Price-earnings ratio
vi) Payout ratio
vii) Debt to assets ratio
(B) Based on the ratios calculated, discuss briefly the improvement or lack thereof in the financial position and operating results from 2013 to 23014 of Jernigan Corporation.