Financial Statement Analysis Page 33
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Chapter 15
S15-9
Computing EPS and P/E ratio [5–10 min]
4
Use the financial statements of Win’s Companies in Short Exercise 15-5. Win’s has
500,000 common shares outstanding during 2012.
Requirements
1. Compute earnings per share (EPS) for Win’s. Round to the nearest cent.
2. Compute Win’s Companies’ price/earnings ratio. The market price per share of
Win’s stock is $68.50.
S15-10
Using ratios to reconstruct an income statement [10 min]
4
A skeleton of Landmark Mills’ income statement appears as follows (amounts in
thousands):
Income Statement
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . .
$
7,200
Cost of goods sold . . . . . . . . . . . . . . . . . .
(a)
Selling and admin expenses . . . . . . . . . . .
1,830
Interest expense . . . . . . . . . . . . . . . . . . . .
(b)
Other expenses . . . . . . . . . . . . . . . . . . . . .
150
Income before taxes . . . . . . . . . . . . . . . . .
$
1,325
Income tax expense . . . . . . . . . . . . . . . . .
(c)
Net income . . . . . . . . . . . . . . . . . . . . . . . .
(d)
Requirement
1. Use the following ratio data to complete Landmark Mills’ income statement:
a. Inventory turnover was 3.50 (beginning inventory was $850; ending inven-
tory was $810).
b. Rate of return on net sales is 0.11.
S15-11
Using ratios to reconstruct a balance sheet [15–20 min]
4
A skeleton of Vintage Mills’ balance sheet appears as follows (amounts in thousands):
Balance Sheet
Cash . . . . . . . . . . . . . . .
$
75
Total current liabilities . . . . .
$
1,900
Receivables . . . . . . . . . .
(a)
Long-term note payable . . . .
(e)
Inventories . . . . . . . . . .
725
Other long-term
Prepaid expenses . . . . .
(b)
liabilities . . . . . . . . . . . . .
980
Total current assets . .
$
(c)
Stockholder’s equity . . . . . . .
2,325
Plant assets, net . . . . . .
(d)
Other assets . . . . . . . . .
2,000
Total liabilities and
Total assets . . . . . . . . . .
$ 6,800
stockholders’ equity . . . . .
$
(f)
Requirement
1. Use the following ratio data to complete Vintage Mills’ balance sheet.
a. Current ratio is 0.80.
b. Acid-test ratio is 0.40.
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