## Answers

**First 6 parts are being answered here.**

**(a) Earnings per share (EPS) = Net income / Average number of common shares outstanding**

where, Average number of common shares outstanding = Beginning common shares + Ending common shares / 2

**Beginning number of common shares = Common shares in 2019 / Par value per share**

Beginning common shares = $298600 / $5 = 59720

**Ending common shares = Common shares in 2020 / Par value per share**

Ending number of common shares = $282800 / $5 = 56560

Average number of common shares outstanding = ($59720 + $56560) / 2 = 116280 / 2 = 58140

Net income in 2020 (given) = $186048

Putting these values in the earnings per share formula, we get,

Earnings per share (EPS) in 2020 = $186048 / 58140 = $3.2 per share

**(b) Return on common stockholder's equity (ROE) = Net income / Average stockholder's equity * 100**

where, Average stockholder's equity = Beginning stockholder's equity + Ending stockholder's equity / 2

**For 2020:**

So, Average stockholder's equity = ($468300 + $549300) / 2 = $1017600 / 2 = $508800

Net income = $186048

Now, putting these values in the above ROE formula, we get,

Return on common stockholder's equity (ROE) = $186048 / $508800 * 100 = 36.6%%

**(c) Return on assets (ROA) = Net income / Average total assets * 100**

where, Average total assets = Beginning assets + Ending assets / 2

For 2020:

Average assets = ($853500 + $972100) / 2 = $1825600 / 2 = $912800

Net income = $186048

Now, putting these values in the above ROA formula, we get,

Return on assets (ROA) = $186048 / $912800 * 100 = 20.4%

**(d) Current ratio = Current assets / Current liabilities**

For 2020:

Current assets = $371300, Current liabilities = $202800

Now, putting these values in the current ratio formula, we get,

Current ratio = $371300 / $202800 = 1.83

**(e) Accounts receivable turnover ratio = Sales / Average accounts receivables**

where, Average accounts receivables = Beginning accounts receivables + Ending receivables / 2

**For 2020:**

Beginning accounts receivables = $102200, Ending accounts receivables = $117200

Average accounts receivables = ($102200 + $117200) / 2 = $219400 / 2 = $109700

Sales = $1811500

Putting these values in the accounts receivable turnover ratio formula, we get,

Accounts receivables turnover ratio = $1811500 / $109700 = 16.5

**(f) Average collection period = 365 / Accounts receivable turnover ratio**

**For 2020:**

Accounts receivable turnover ratio = 16.5 times ( as computed in point (d) above)

Putting these values in the Days' sales in inventory ratio formula, we get,

Average collection period = 365 / 16.5 = 22.1 days

.