Acc280 Financial Accounting: P15-6 The comparative statements of Dillon Company

Acc280 Financial Accounting

P15-6
The comparative statements of Dillon Company are presented below.
DILLON COMPANY
Income Statement
For Year Ended December 31
2009 2008
Net sales (all on account) 600,000 520,000
Expenses
Cost of goods sold 415,000 354,000
Selling and administrative 120,800 114,800
Interest expense 7,800 6,000
Income tax expense 18,000 14,000
Total expenses 561,600 488,800
Net income 38,400 31,200

DILLON COMPANY
Balance Sheets
December 31
Assets 2009 2008
Current assets
Cash 21,000 18,000
Short-term investments 18,000 15,000
Accounts receivable (net) 86,000 74,000
Inventory 90,000 70,000
Total current assets 215,000 177,000

Plant assets (net) 423,000 383,000
Total assets $638,000 $560,000

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable 122,000 110,000
Income taxes payable 23,000 20,000
Total current liabilities 145,000 130,000
Long-term liabilities
Bonds payable 120,000 80,000
Total liabilities $265,000 $210,000

Stockholders’ equity
Common stock ($5 par) 150,000 150,000
Retained earnings 223,000 200,000
Total stockholders’ equity $373,000 $350,000
Total liabilities and stockholders’ equity $638,000 $560,000

Additional data:
The common stock recently sold at $19.50 per share.
The year-end balance in the allowance for doubtful accounts was $3,000 for 2009 and $2,400 for 2008.
Instructions:
Compute the following ratios for 2009.
(a) Current ratio
(b) Acid-test ratio
(c) Receivables turnover
(d) Inventory turnover
(e) Profit margin
(f) Asset turnover.
(g) Return on assets
(h) Return on common stockholders’ equity
(i) Earnings per share
(j) Price-earnings
(k) Payout
(l) Debt to total assets
(m) Times interest earned
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