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Question - Comparative financial statements for Heritage Services for the fiscal year ending December 31 appear in the next couple pages. The company did not issue any new common or preferred shares during the year. A total of 600 common shares were outstanding. The interest rate on the bond payable is 14%, the income tax rate was 40% and the dividend per share for the common shares were $0.75. The market value of the common share at the end of the year was $26. All of the sales for the company are on account.
HERITAGE SERVICES COMPARATIVE BALANCE SHEET (dollars in thousand)
Asset:
This year
Last year
Current Asset:
Cash
$1,080
$1,210
Account receivable, net
9000
6500
Inventory
12,000
10,600
Prepaid Expenses
600
500
Total Current Asset
22,680
18,810
Property and Equipment:
Land
9,000
Building and Equipment
36,800
38,000
Total Property and equipment
45,800
47,000
Total Assets:
68,480
65,810
Liabilities and Shareholder Equity
Current Liability:
Accounts payable
$18,500
$17,400
Accrued Payable
900
700
Notes payable, short term
0
100
Total Current Liabilities
19,400
18,200
Long - Term liabilities:
Bond payable
8,000
Total Liabilities
27,400
26,200
Shareholders' Equity:
Preferred shares
1,000
Common shares
2,000
Additional paid - up Capital
4,000
Total paid in capital
7,000
Retained Earnings
34,080
32,610
Total shareholders' Equity
41,080
39,610
Total Liabilities and Shareholders' Equity
$68,480
HERITAGE SERVICES COMPARATIVE INCOME STATEMENT (dollars in thousand)
Sales
$66,000
$64,000
Cost of Goods sold
43,000
42,000
Gross Margin
23,000
22,000
Selling and Administrative Expenses:
Selling Expenses
11,500
11,000
Administrative Expenses
7,400
Total Selling and Administrative Expenses
18,900
18,000
Net operating income
4,100
Interest Expense
800
Net Income before taxes
3,300
3,200
Income Taxes
1,320
1,280
Net Income
1,980
1,920
Dividend paid to preferred shareholders
60
400
Net income remaining for common shareholders
1,520
Dividends paid to preferred shareholders
450
Net income added to retained earnings
1,470
1,070
Retained earnings, beginning of year
31,540
Retained earnings, end of year
$34,080
Required - COMPUTE THE FOLLOWING
1. Compute the Gross Margin Percentage?
2. Compute the Earnings per share for common shareholders?
3. Compute the Price-earnings ratio?
4. Compute the Dividend payout ratio?
5. Compute the Dividend yield ratio?
6. Compute the Return on total assets?
7. Compute the Return on common stockholders' equity?
8. Compute the Book value per share?
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