Problem 142A Your answer is partially correct Try again The

Problem 14-2A Your answer is partially correct. Try again The comparative statements of Painter Tool Company are presented below PAINTER TOOL COMPANY Income Statement For the Years Ended December 31 2017 2016 Net sales Cost of goods sold Gross profit Selling and administrative expenses Income from operations Other expenses and losses $1,817,200 1,012,800 804,400 516,400 288,000 $1,749,800 970,000 779,800 475,600 304,200 Interest expense Income before income taxes Income tax expense Net income 17,700 270,300 80,000 $190,300 15,000 289,200 77,900 $211,300 PAINTER TOOL COMPANY Balance Sheets Assets 2017 2016 Current assets Cash Short-term investments Accounts receivable (net) Inventory $60,700 70,900 116,500 123,300 371,400 596,300 $967,700 $63,400 50,100 102,500 116,000 332,000 520,900 $852,900 Total current assets Plant assets (net) Total assets Liabilities and Stockholders\' Equity Current liabilities $160,600 43,500 204,100 201,900 $144,300 42,200 186,500 201,900 Accounts payable Income taxes payable Total current liabilities Bonds payable

Solution

Answer a.

Earnings per share = Net Income / Weighted-average common shares
Earnings per share = $190,300 / 57,200
Earnings per share = $3.33

Answer b.

Average Stockholders’ Equity = ($561,700 + $464,500) / 2
Average Stockholders’ Equity = $513,100

Return on Common Stockholders’ Equity = Net Income / Average Stockholders’ Equity
Return on Common Stockholders’ Equity = $190,300 / $513,100
Return on Common Stockholders’ Equity = 0.3709 = 37.09%

Answer c.

Average Assets = ($967,700 + $852,900) / 2
Average Assets = $910,300

Return on Assets = Net Income / Average Assets
Return on Assets = $190,300 / $910,300
Return on Assets = 0.2091 = 20.91%

Answer d.

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $371,400 / $204,100
Current Ratio = 1.82 : 1

Answer e.

Acid-test Ratio = (Current Assets - Inventory) / Current Liabilities
Acid-test Ratio = ($371,400 - $123,300) / $204,100
Acid-test Ratio = 1.22 : 1