15-2 Financial Ratios for Common Stockhol…

Exercise 15-2 Financial Ratios for Common Stockholders [LO2]Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or preferred stock during the year. A total of 500 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.50. The market value of the company’s common stock at the end of the year was $28. All of the company’s sales are on account.Heritage Antiquing Services Comparative Balance Sheet (dollars in thousands)This YearLast Year  Assets  Current assets:     Cash$1,130$1,320     Accounts receivable, net9,6008,100     Inventory13,90010,800     Prepaid expenses720560  Total current assets25,35020,780  Property and equipment:     Land9,7009,700     Buildings and equipment, net45,95840,784  Total property and equipment55,65850,484  Total assets$81,008$71,264  Liabilities and Stockholders’ Equity  Current liabilities:     Accounts payable$20,500$18,900     Accrued payables920750     Notes payable, short term240240  Total current liabilities21,66019,890  Long-term liabilities:     Bonds payable8,1008,100  Total liabilities29,76027,990  Stockholders’ equity:     Preferred stock1,0001,000     Common stock500500     Additional paid-in capital4,0004,000       Total paid-in capital5,5005,500       Retained earnings45,74837,774  Total stockholders’ equity51,24843,274  Total liabilities and stockholders’ equity$81,008$71,264Heritage Antiquing Services Comparative Income Statement and Reconciliation (dollars in thousands)This YearLast Year  Sales$70,000$65,000  Cost of goods sold37,00036,000  Gross margin33,00029,000  Selling and administrative expenses:  Selling expenses11,30010,100  Administrative expenses7,1006,400  Total selling and administrative expenses18,40016,500  Net operating income14,60012,500  Interest expense810810  Net income before taxes13,79011,690  Income taxes5,5164,676  Net income8,2747,014  Dividends to preferred stockholders50330  Net income remaining for common stockholders8,2246,684  Dividends to common stockholders250250  Net income added to retained earnings7,9746,434  Retained earnings, beginning of year37,77431,340  Retained earnings, end of year$45,748$37,774Required:Compute the following financial ratios for common stockholders for this year:1.Gross margin percentage. (Round your answer to 1 decimal place. Omit the “%” sign in your response.)  Gross margin percentage%2.Earnings per share of common stock. (Round your answer to 2 decimal places. Omit the “$” sign in your response.)  Earnings$  per share3.Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.)  Price-earnings ratio  4.Dividend payout ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place. Omit the “%” sign in your response.)  Dividend payout ratio%5.Dividend yield ratio. (Round your answer to 1 decimal place. Omit the “%” sign in your response.)  Dividend yield ratio%6.Return on total assets. (Round your answer to 1 decimal place. Omit the “%” sign in your response.)  Return on total assets%7.Return on common stockholders’ equity. (Round your answer to 1 decimal place. Omit the “%” sign in your response.)  Return on common stockholders’ equity%8.Book value per share. (Round your answer to 2 decimal places. Omit the “$” sign in your response.)  Book value$  per share