2. Ratio computation. The financial statements of the Lone Pine Company follow. LONE PINE COMPANY Comparative Balance Sheets December 31, 20X2 and 20X1 ($000 Omitted)
Question
2. Ratio computation. The financial statements of the Lone Pine Company follow.LONE PINE COMPANY
Comparative Balance Sheets
December 31, 20X2 and 20X1 ($000 Omitted)
20X2 20X1
Assets
Current Assets
Cash and Short-Term Investments $ 3,400 $ 3,000
Accounts Receivable (net) 6,000 4,800
Inventories 5,000 4,600
Total Current Assets $14,400 $12,400
Property, Plant, and Equipment
Land $4,700 $ 3,000
Buildings and Equipment (net) 4,500 3,400
Total Property, Plant, and Equipment $9,200 $6,400
Total Assets $23,600 $18,800
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts Payable $4,800 $4,100
Notes Payable 4,100 4,300
Total Current Liabilities $5,900 $6,000
Long-Term Liabilities
Bonds Payable 7,100 4,500
Total Liabilities $13,000 $10,500
Stockholders’ Equity
Common Stock par value $1 $ 3,200 $ 2,600
Number of Shares 3,200 2,600
Retained Earnings 7,400 5,700
Total Stockholders’ Equity $10,600 $8,300
Total Liabilities and Stockholders’ Equity $23,600 $18,800
LONE PINE COMPANY
Statement of Income and Retained Earnings
Or the Year Ending December 31, 20X2 ($000 Omitted)
Net Sales* $45,000
Less: Cost of Goods Sold $20,000
Selling Expense 6,000
Administrative Expense 4,000
Interest Expense 400
Income Tax Expense 2,000 32,400
Net Income $ 3,600
Retained Earnings, Jan. 1 900
$ 4,500
Cash Dividends Declared and Paid 3,100
Retained Earnings, Dec. 31 $ 1,400
*All sales are on account.
Instructions
Compute the following items for Lone Pine Company for 20X2, rounding all calculations to two decimal places when necessary:
a. Quick ratio
b. Current ratio
c. Inventory-turnover ratio
d. Accounts-receivable-turnover ratio
e. Return-on-assets ratio
f. Net-profit-margin ratio
g. Return-on-common-stockholders’ equity
h. Debt-to-total assets
i. Number of times that interest is earned
j. Dividend payout rate
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