The comparative financial statements of Optical Solutions Inc. are as follows. The market price of...

Question

The comparative financial statements of Optical Solutions Inc. are as follows. The market price of Optical Solutions Inc. common stock was $60.00 on December 31, 2010.

Instructions
Determine the following measures for 2010, rounding to one decimal place:
1. Working capital
2. Current ratio
3. Quick ratio
4. Accounts receivable turnover
5. Number of days’ sales in receivables
6. Inventory turnover
7. Number of days’ sales in inventory
8. Ratio of fixed assets to long-term liabilities
9. Ratio of liabilities to stockholders’ equity
10. Number of times interest charges earned
11. Number of times preferred dividends earned
12. Ratio of net sales to assets
13. Rate earned on total assets
14. Rate earned on stockholders’ equity
15. Rate earned on common stockholders’ equity
16. Earnings per share on common stock
17. Price-earnings ratio
18. Dividends per share of common stock
19. Dividend yield

David · Accepted Answer

1. Working Capital = Current Assets – Current Liability 
 WC = 1,116,000 – 360,000 
 WC = $ 756,000
2. Current Ratio = Current Assets / Current Liability 
= 1,116,000/360,000 
= 3.1
3. Quick Ratio = (Current Assets-Inventory) / Current Liability 
= (1,116,000-208,000)/360,000 
= 2.5
4. Accounts receivable turnover = Net Sales / Accounts Receivables 
= 1,608,000/260,000 
= 6.18
5. Number of Days’ sales in receivables = 365 / Accounts receivable turnover 
= 365/6.18 
= 59.06
6. Inventory Turnover = Cost of Goods Sold / Inventory 
= 480,200/208,000 
= 2.3
7.

The comparative financial statements of Optical Solutions Inc. are as follows. The market price of Optical Solutions Inc. common stock was $60.00 on December 31, 2010. Instructions Determine the...

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