Problem 13-17A Ratio analysis
Weimar Company’s income statement information follows.
2011 2010
Net sales $420,000 $260,000
Income before interest and taxes 110,000 85,000
Net income after taxes 55,500 63,000
Interest expense 9,000 8,000
Stockholders’ equity, December 31 (2009: $200,000) 305,000 235,000
Common stock, par $50, December 31 206,000 230,000
The average number of shares outstanding was 7,800 for 2011 and 6,900 for 2010.
Required
Compute the following ratios for Weimar for 2011 and 2010.
a. Number of times interest was earned.
b. Earnings per share based on the average number of shares outstanding.
c. Price-earnings ratio (market prices: 2011, $64 per share; 2010, $78 per share).
d. Return on average equity.
e. Net margin.
CHECK FIGURES
a. 2011: 12.22 times
c. 2010: 8.5 times
Click here for the solution: Weimar Company’s income statement information follows
