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

Samuel's Companies
Income Statement
Years Ended May 31, 2020 and 2019
20202019
Net Sales$57,190,000$41,120,000
Cost of Goods Sold27,650,00029,300,000
Interest Expense697,000624,000
All Other Expenses6,910,0008,390,000
Net Income$21,933,000$2,806,000

 

Samuel's Companies
Balance Sheet
May 31, 2020
DescriptionAmount
Subcategory,Assets
Cash8,790,000
Short-term Invest.25,830,000
Accounts Receivable5,760,000
Merchandise Inventory2,270,000
Other Current Assets9,140,000Single line
Total Current AssetsSingle line51,790,000
All Other Assets31,860,000Single line
Total AssetsSingle line83,650,000Double line
Subcategory,Liabilities
Total Current Liab.24,190,000
Long-term Liab.13,230,000Single line
Total LiabilitiesSingle line37,420,000
Subcategory,Stockholders' Equity
Common Stock12,960,000
Retained Earnings33,270,000Single line
Total EquitySingle line46,230,000Single line
Total Liab. + EquitySingle line83,650,000Double line

 

Samuel's Companies
Balance Sheet
May 31, 2019
DescriptionAmount
Subcategory,Assets
Cash7,000,000
Short-term Invest.10,110,000
Accounts Receivable5,360,000
Merchandise Inventory3,210,000
Other Current Assets1,630,000Single line
Total Current AssetsSingle line27,310,000
All Other Assets28,170,000Single line
Total AssetsSingle line55,480,000Double line
Subcategory,Liabilities
Total Current Liab.13,100,000
Long-term Liab.10,910,000Single line
Total LiabilitiesSingle line24,010,000
Subcategory,Stockholders' Equity
Common Stock12,960,000
Retained Earnings18,510,000Single line
Total EquitySingle line31,470,000Single line
Total Liab. + EquitySingle line55,480,000Double 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 $69.00.

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

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