Accounting and Ratio Analysis - Essay Example

a) Return on Total assets = 4.2 %
b) Return on Common stockholders’ equity = 10.06 %
c) The company’s financial leverage is negative as the stockholder’s equity is more than the return on total assets.
Section 2

a) Earnings per share is $ 5.2
b) The dividend payout ratio for common stock= $ 0.23
c) The dividend yield ratio for common stock = 0.37%
d) The price-earnings ratio = 11, the price-earnings ratio is more in Stephens Company, the investors regard his company as more profitable
e) The book value is $40. The difference between the book value ($40) and market value ($60) indicates that a considerable margin exists, hence it is a bargain.
f) The gross margin percentage is 27
Section 3

a) The current ratio = 1.86
b) The acid test ratio = 0.85
c) The average collection period = 38.4 days
d) The average sale period = 107days
e) The debt- to equity ratio = 1.14
f) The time's interest earned = 4.25
Section 4

Upon the diligent research carried out, four factors would describe the credibility of the load and its feasibility
i. Debt to equity ratio
ii. Current ratio
iii. Average sale period; and
iv. Return on assets
Return on assets for the companies is 10.2%, whereas from the data we can deduce that return on assets is 4.2 %, which is relatively lesser for the companies and the return on common stockholder’s equity is more in comparison to ROA, that is why the company has negative financial leverage.

Based on these values and analysis, I would recommend that the load should be approved.