Samuel’s Companies, operating educational tutoring centers, reported the following summarized figures:

Samuel's Companies
Income Statement
Years Ended May 31, 2020 and 2019

	2020	2019
Net Sales	$57,270,000	$41,120,000
Cost of Goods Sold	27,770,000	29,400,000
Interest Expense	698,000	630,000
All Other Expenses	6,940,000	8,490,000
Net Income	$21,862,000	$2,600,000

 

Samuel's Companies
Balance Sheet
May 31, 2020

Description	Amount
Subcategory,Assets
Cash	8,570,000
Short-term Invest.	25,820,000
Accounts Receivable	5,800,000
Merchandise Inventory	2,140,000
Other Current Assets	8,930,000Single line
Total Current Assets	Single line51,260,000
All Other Assets	32,070,000Single line
Total Assets	Single line83,330,000Double line
Subcategory,Liabilities
Total Current Liab.	23,970,000
Long-term Liab.	13,220,000Single line
Total Liabilities	Single line37,190,000
Subcategory,Stockholders' Equity
Common Stock	13,000,000
Retained Earnings	33,140,000Single line
Total Equity	Single line46,140,000Single line
Total Liab. + Equity	Single line83,330,000Double line

 

Samuel's Companies
Balance Sheet
May 31, 2019

Description	Amount
Subcategory,Assets
Cash	6,910,000
Short-term Invest.	10,130,000
Accounts Receivable	5,490,000
Merchandise Inventory	3,010,000
Other Current Assets	1,670,000Single line
Total Current Assets	Single line27,210,000
All Other Assets	28,130,000Single line
Total Assets	Single line55,340,000Double line
Subcategory,Liabilities
Total Current Liab.	13,010,000
Long-term Liab.	10,930,000Single line
Total Liabilities	Single line23,940,000
Subcategory,Stockholders' Equity
Common Stock	13,090,000
Retained Earnings	18,310,000Single line
Total Equity	Single line31,400,000Single line
Total Liab. + Equity	Single line55,340,000Double line

 

Samuel’s has 1,000,000 common shares outstanding during 2020.

Compute Samuel’s Companies’ current ratio at May 31, 2020 and 2019.

 ` (` Total current assets`)`  `/`  `(` Total Current Liabilities `)` `=`  Current ratio

2020:

( `$`  `)`  `/`  `(` `$`  `)` `=`  `(`  `)` 

2019:

( `$`  `)`  `/`  `(` `$`  `)` `=`  `(`  `)` 

1. Compute the inventory turnover, days’ sales in inventory, and gross profit percentage for Samuel’s Companies for 2020.

 ` (` Cost of goods sold `)`  `/`  `(` Average merchandise inventory `)` `=`  Inventory turnover

`(`  `$`  `)`  `/`  `(` `$`  `)` `=`  `(`  `)` 

 ` (` 365 days `)`  `/`  `(` Inventory turnover `)` `=`  Day's sales in inventory

`(`  `)`  `/`  `(`  `)` `=`  `(`  `)` 

 ` (` Gross profit `)`  `/`  `(` Net sales revenue `)` `=`  Gross profit percentage

( `$` `)`  `/`  `(` `$` `)` `=`  `(`  `%` `)` 

2. Compute days’ sales in receivables during 2020. Assume all sales were on account.

 ` (` Net credit sales `)`  `/`  `(` Average net accounts receivables `)` `=`  Accounts receivable turnover ratio

( `$`  `)`  `/`  `(` `$`  `)` `=`  `(`  `)` 

 ` (` 365 days `)`  `/`  `(` Accounts receivable turnover ratio `)` `=`  Day's Sales in Receivables

( `)`  `/`  `(`  `)` `=`  `(`  `)` 

1. Compute the debt ratio and the debt to equity ratio at May 31, 2020, for Samuel’s Companies.

 ` (` Total liabilities `)`  `/`  `(` Total assets `)` `=`  Debt ratio

`(`  `$`  `)`  `/`  `(` `$`  `)` `=`  `(`  `%`  `)` 

 ` (` Total liabilities `)`  `/`  `(` Total equity `)` `=`  Debt to equity ratio

`(`  `$`  `)`  `/`  `(` `$`  `)` `=`  `(`   `)` 

1. Compute the profit margin ratio for Samuel’s Companies for 2020.

 ` (` Net income `)`  `/`  `(` Net sales `)` `=`  Profit margin ratio

 `(`  `$`  `)`  `/`  `(` `$`  `)` `=`  `(`  `%`  `)` 

2. Compute the rate of return on total assets for 2020.

 ` (` Net income `+`  Interest expense `)`  `/`  `(` Average total assets `)` `=`  Rate of return on total assets

 `(`  `$`  `+`  `$`  `)`  `/`  `(` `$`  `)` `=`  `(`  `%`  `)` 

3. Compute the asset turnover ratio for 2020.

 ` (` Net sales `)`  `/`  `(` Average total assets `)` `=`  Asset turnover ratio

 `(`  `$`  `)`  `/`  `(` `$`  `)` `=`  `(`  `%`  `)` 

4. Compute the rate of return on common stockholders’ equity for 2020.

 ` (` Net income `-`  Preferred dividends `)`  `/`  `(` Average common stockholders' equity `)` `=`  Rate of return on common stockholders' equity

 `(`  `$`  `-`  `$`  `)`  `/`  `(` `$`  `)` `=`  `(`  `%`  `)` 

1. Compute earnings per share (EPS) for 2020 for Samuel’s. Round to the nearest cent.

 ` (` Net income `-`  Preferred dividends `)`  `/`  `(` Weighted average number of common shares outstanding `)` `=`  Earnings per share

 `(`  `$`  `-`  `$`  `)`  `/`   `(` `)` `=`  `(` `$`  `)` 

2. Compute Samuel’s Companies’ price/earnings ratio for 2020. The market price per share of Samuel’s stock is $64.00.

 ` (` Market price per share of common stock `)`  `/`  `(` Earnings per share `)` `=`  Price/earnings ratio

 `(`  `$`  `)`  `/`  `(` `$`  `)` `=`  `(`  `)`