Hyrkas Corporation's most recent balance sheet and income statement appear below:
Dividends on common stock during Year 2 totaled $30 thousand. The market price of common stock at the end of Year 2 was $6.90 per share.Required:Compute the following for Year 2:a. Gross margin percentage.b. Earnings per share.c. Price-earnings ratio.d. Dividend payout ratio.e. Dividend yield ratio.f. Return on total assets.g. Return on equity.h. Book value per share.i. Working capital.j. Current ratio.k. Acid-test (quick) ratio.l. Accounts receivable turnover.m. Average collection period.n. Inventory turnover.o. Average sale period.p. Times interest earned ratio.q. Debt-to-equity ratio.

a.Gross margin percentage = Gross margin ÷ Sales= $470 ÷ $1,200 = 39.2%b.Earnings per share= Net income ÷ Average number of common shares outstanding*= $80 ÷ (100 shares + 100 shares)/2 = $0.80 per share*Number of common shares outstanding = Common stock ÷ Par value= $200 ÷ $2 per share = 100 sharesc.Price-earnings ratio= Market price per share ÷ Earnings per share (see above)= $6.90 per share ÷ $0.80 per share = 8.625d.Dividend payout ratio= Dividends per share* ÷ Earnings per share (see above)= $0.30 per share ÷ $0.80 per share = 37.5%*Dividends per share= Dividends ÷ Number of common shares outstanding (see above)= $30 ÷ 100 shares = $0.30 per sharee.Dividend yield ratio= Dividends per share (see above) ÷ Market price per share= $0.30 per share ÷ $6.90 per share = 4.35%f.Return on total assets= Adjusted net income* ÷ Average total assets**= $94.7 ÷ $1,345 = 7.04%*Adjusted net income= Net income + [Interest expense × (1 − Tax rate)]= $80 + [$21 × (1 − 0.30)] = $94.7**Average total assets = ($1,340 + $1,350) ÷ 2 = $1,345g.Return on equity = Net income ÷ Average total stockholders' equity*= $80 ÷ $915 = 8.7%*Average total stockholders' equity = ($940 + $890) ÷ 2 = $915h.Book value per share= Total stockholders' equity ÷ Number of common shares outstanding*= $940 ÷ 100 shares = $9.40 per share*Number of common shares outstanding= Common stock ÷ Par value= $200 ÷ $2 per share = 100 sharesi.Working capital= Current assets − Current liabilities= $580 − $250 = $330j.Current ratio= Current assets ÷ Current liabilities= $580 ÷ $250 = 2.32k.Acid-test (quick) ratio= Quick assets* ÷ Current liabilities= $370 ÷ $250 = 1.48*Quick assets= Cash + Marketable securities + Accounts receivable= $150 + $0 + $220 = $370l.Accounts receivable turnover= Sales on account ÷ Average accounts receivable*= $1,200 ÷ $230 = 5.22*Average accounts receivable = ($220 + $240) ÷ 2 = $230m.Average collection period = 365 days ÷ Accounts receivable turnover (see above)= 365 days ÷ 5.22 = 69.9 daysn.Inventory turnover = Cost of goods sold ÷ Average inventory balance*= $730 ÷ $175 = 4.17*Average inventory balance = ($190 + $160) ÷ 2 = $175o.Average sale period = 365 days ÷ Inventory turnover (see above)= 365 days ÷ 4.17 = 87.5 daysp.Times interest earned ratio = Earnings before interest expense and income taxes ÷ Interest expense= $135 ÷ $21 = 6.43q.Debt-to-equity ratio = Total liabilities ÷ Stockholders' equity= $400 ÷ $940 = 0.43