3.

Espinola Corporation's most recent balance sheet and income statement appear below:
BALANCE SHEETS
2006
ASSETS
Cash & equivalents
Accounta receivable
Inventory
Prepaid expenses
Total current assets
Plant & equipment, net
Total Assets

Accounts payable
Accrued payable
Notes payable, current
Total current liabilities
Bonds payable
Total liabilities

$
LIABILITIES & EQUITIES
$

Preferred stock, $100 par value, 5%

Common stock, $1 par value
Additional paid in capital, common stock
Retained earnings
Total equities
Total liabilities & equities

320,000
220,000
140,000
20,000
700,000
860,000
1,560,000

200,000
80,000
40,000
320,000
210,000
530,000
100,000
100,000
150,000
680,000
1,030,000
1,560,000

INCOME STATEMENT
Sales
Cost of goods sold
Gross margin
Selling & Admin expense
Net operating income
Interest expense
Income before tax
Income tax
Net income
Dividends paid, preferred
Net income for common shareholders
Dividends paid, common
Net income added to retained earnings
Beginning retained earnings
Ending retained earnings

2006
1,220,000
790,000
430,000
268,000
162,000
26,000
136,000
41,000
95,000
5,000
90,000
40,000
50,000
630,000
680,000

Other:
Market value of stock end of year
Tax rate
Bond interest
Return demanded on preferred stock
Return demanded on common stock

Required compute the following for 2006 :

a. Gross margin percentage.
b. Earnings per share (of common stock).
c. Price-earnings ratio.
d. Dividend payout ratio.
dividend per share
dividend payout ratio
e. Dividend yield ratio.
f. Return on total assets.
after tax cost of interest
average total assets
return on total assets
g. Return on common stockholders' equity.
average stockholders equity
average preferred stock
return on equity
h. Book value per share.
i. Working capital.
j. Current ratio.
k. Acid-test ratio.
l. Accounts receivable turnover.
m. Average collection period (days).
n. Inventory turnover.
o. Average sale period (days).
p. Times interest earned.
q. Debt-to-equity ratio.
r. Show that financial leverage is positive or negative.

12.87
30%
10%
10%
14%

me statement appear below:

2005
$

180,000
240,000
130,000
20,000
570,000
920,000
1,490,000

170,000
80,000
40,000
290,000
220,000
510,000
100,000
100,000
150,000
630,000
980,000
1,490,000