The comparative financial statements of Bettancort Inc

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

of Bettancort Inc. common stock was $71.25 on December 31, 2014.

Bettancort Inc.

Comparative Retained Earnings Statement

For the Years Ended December 31, 2014 and 2013

2014 2013

Retained earnings, January 1 . . . $2,655,000 $2,400,000

Add net income for year . . . . . . . . 300,000 280,000

Total . . . . . . . . . . . . . . . . . . . . . . . $2,955,000 $2,680,000

Deduct dividends:

On preferred stock . . . . . . . . . . . . .$ 15,000 $ 15,000

On common stock. . . . . . . . . . . . . . 10,000 10,000

Total . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000 $ 25,000

Retained earnings, December 31 . . . . . . . . . . . . …………………………………………………$2,930,000 $2,655,000

Bettancort Inc.

Comparative Income Statement

For the Years Ended December 31, 2014 and 2013

2014 2013

Sales (all on account) . . . . . . . . $1,212,000 $1,010,000

Sales returns and allowances . . . .12,000 10,000

Net sales. . . . . . . . . . . . . . . . . . . .$1,200,000 $1,000,000

Cost of goods sold. . . . . . . . . . . . .500,000 475,000

Gross profit . . . . . . . . . . . . . . . . . .$ 700,000 $ 525,000

Selling expenses . . . . . . . . . . . . . $ 240,000 $ 200,000

Administrative expenses . . . . . . . 180,000 150,000

Total operating expenses . . . . . $ 420,000 $ 350,000

Income from operations . . . . . . .$ 280,000 $ 175,000

Other income . . . . . . . . . . . . . . . . . 166,000 225,000

Other expense (interest) . . . . . . . . . .66,000 60,000

Income before income tax . . . . . . . $ 380,000 $ 340,000

Income tax expense . . . . . . . . . . . . . . 80,000 60,000

Net income . . . . . . . . . . . . . . . . . . . $ 300,000 $ 280,000

Bettancort Inc.

Comparative Balance Sheet

December 31, 2014 and 2013

Dec. 31, 2014 Dec. 31, 2013

Assets

Current assets:

Cash . . . . . . . . . . . . . . . . . . . 450,000 $ 400,000

Marketable securities. . . . . .300,000 260,000

Accounts receivable (net) . .130,000 110,000

Inventories . . . . . . . . . . . . . . . 67,000 58,000

Prepaid expenses . . . . . . . . . 153,000 139,000

Total current assets . . . . . . $1,100,000 $ 967,000

Long-term investments . . . 2,350,000 2,200,000

Property, plant, and equipment (net) . . . . . . . . . . . . . ………………………………………….1,320,000 1,188,000

Total assets . . . . . . . . . . . . .$4,770,000 $4,355,000

Liabilities

Current liabilities . . . . . . . . . . $440,000 $ 400,000

Long-term liabilities:

Mortgage note payable, 8%, due 2019 . . . . . . . . . . . ……………………………………………$ 100,000 $ 0

Bonds payable, 10%, due 2015 . . . . . . . . . . . . . . . . . ……………………………………………1,000,000 1,000,000

Total long-term liabilities . . . $1,100,000 $1,000,000

Total liabilities . . . . . . . . . . . . $1,540,000 $1,400,000

Stockholders’ Equity

Preferred $0.75 stock, $10 par ……………………………………………….$ 200,000 $ 200,000

Common stock, $10 par. . . . . . . . .100,000 100,000

Retained earnings . . . . . . . . . . . 2,930,000 2,655,000

Total stockholders’ equity . . . .$3,230,000 $2,955,000

Total liabilities and stockholders’ equity . . . . . . . . . . . ……………………………………………….$4,770,000 $4,355,000

Instructions

Determine the following measures for 2014, 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 are earned

11. Number of times preferred dividends are 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

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