m
17

17




  


Accounting, 21st Edition
Warren Reeve Fess

PowerPoint Presentation by Douglas Cloud

Professor Emeritus of Accounting
Pepperdine University

Copyright 2004 South-Western, a division

of Thomson Learning. All rights reserved.


 clip art included in this
electronic presentation is used with the permission of
NVTech Inc.

V
 

 

  

  
 

 
  

 
 
 



 




Obj

1. List the basic financial statement




 
analytical procedures.


2. Apply financial statement analysis to


assess the solvency of a business.
3. Apply financial statement analysis to
assess the profitability of a business.
4. Summarize the uses and limitations of
analytical measures.
5. Describe the contents of corporate
annual reports.

  

 
   


 

  

 


  



 



 

 




Lincoln Company
Comparative Balance Sheet
December 31, 2006 and 2005

u
V
ncrease (Decrease)
Amount
Percent
$ 17,000
3.2%
(82,500) (46.5%)
(25,500) (5.4%)

$ (91,000) (7.4%)

2006
2005
Assets
Current assets
$ 550,000 $ 533,000
Long-term investments
95,000
177,500
Fixed assets (net)
444,500
470,000
Intangible assets
50,000
50,000
Total assets
$1,139,500 $1,230,500
Liabilities
Current liabilities
$ 210,000 $ 243,000 $ (33,000) (13.6%)
Long-term liabilities
100,000
200,000 (100,000) (50.0%)
Total liabilities
$ 310,000 $ 443,000 $(133,000) (30.0%)
Stockholders Equity
Preferred 6% stock, $100 par$ 150,000 $ 150,000

Common stock, $10 par

500,000
500,000

Retained earnings
179,500
137,500
$42,000
30.5%
Total stockholders equity $ 829,500 $ 787,500
$42,000
5.3%
Total liab. & SE
$1,139,500 $1230,500 $(91,000) (7.4%)

Lincoln Company
Comparative Balance Sheet
December 31, 2006 and 2005

ncrease (Decrease)
2006
2005
Amount
Percent
$ 550,000 $ 533,000 $ 17,000
3.2%
95,000
177,500
(82,500) (46.5%)
444,500 Analysis:
470,000
(25,500) (5.4%)
orizontal
50,000
50,000

Difference
$1,139,500
$1,230,500$17,000
$ (91,000) (7.4%)

Assets
Current assets
Long-term investments
Fixed assets (net)
Intangible assets
Total assets
=
Liabilities
Base year (2005) $533,000
Current liabilities
$ 210,000 $ 243,000 $ (33,000)
Long-term liabilities
100,000
200,000 (100,000)
Total liabilities
$ 310,000 $ 443,000 $(133,000)
Stockholders Equity
Preferred 6% stock, $100 par$ 150,000 $ 150,000

Common stock, $10 par

500,000
500,000

Retained earnings
179,500
137,500
$42,000
Total stockholders equity $ 829,500 $ 787,500
$42,000
Total liab. & SE
$1,139,500 $1230,500 $(91,000)

3.2%

(13.6%)
(50.0%)
(30.0%)

30.5%
5.3%
(7.4%)

Lincoln Company
Comparative Balance Sheet
December 31, 2006 and 2005

ncrease (Decrease)
Amount
Percent
$ 17,000
3.2%
(82,500) (46.5%)
(25,500) (5.4%)

$ (91,000) (7.4%)

2006
2005
Assets
Current assets
$ 550,000 $ 533,000
Long-term investments
95,000
177,500
Fixed assets (net)
444,500
470,000
Intangible assets
50,000
50,000
Total assets
$1,139,500 $1,230,500
orizontal Analysis:
Liabilities
Current liabilities
$ 210,000 $ 243,000 $ (33,000) (13.6%)
Difference
$(82,500)
Long-term liabilities
100,000
200,000 (100,000)
(50.0%)
= (46.5%)
Base
year (2005)
$177,500
Total liabilities
$ 310,000
$ 443,000
$(133,000) (30.0%)
Stockholders Equity
Preferred stock, $100 par $ 150,000 $ 150,000

Common stock, $10 par

500,000
500,000

Retained earnings
179,500
137,500
$42,000
30.5%
Total stockholders equity $ 829,500 $ 787,500
$42,000
5.3%
Total liab. & SE
$1,139,500 $1230,500 $(91,000) (7.4%)

Lincoln Company
Comparative Balance Sheet
December
31, 2006and
2005


! 
ncrease (Decrease)
2006
2005
Amount
Percent

 
Assets
Current assets 


$ 550,000 $ 533,000
$ 17,000
3.2%
 !
Long-term investments
95,000
177,500
(82,500) (46.5%)
Fixed assets (net)
444,500
 470,000 (25,500) (5.4%)
Intangible assets
50,000
50,000

Total assets
$1,139,500 $1,230,500 $ (91,000) (7.4%)
Liabilities
orizontal
Current liabilities
$ 210,000 Analysis:
$ 243,000 $ (33,000) (13.6%)
Long-term liabilities
100,000
200,000 (100,000) (50.0%)
Total liabilities
$ Difference
310,000 $ 443,000 ? $(133,000) (30.0%)
= ?
Stockholders Equity
Base year (2005)
?
Preferred 6% stock, $100 par$ 150,000 $ 150,000

Common stock, $10 par

500,000
500,000

Retained earnings
179,500
137,500
$42,000
30.5%
Total stockholders equity $ 829,500 $ 787,500
$42,000
5.3%
Total liab. & SE
$1,139,500 $1230,500 $(91,000) (7.4%)

Lincoln Company
Comparative Balance Sheet
December 31, 2006 and 2005

ncrease (Decrease)
Amount
Percent
$ 17,000
3.2%
(82,500) (46.5%)
(25,500) (5.4%)

$ (91,000) (7.4%)

2006
2005
Assets
Current assets
$ 550,000 $ 533,000
Long-term investments
95,000
177,500
Fixed assets (net)
444,500
470,000
Intangible assets
50,000
50,000
Total assets
$1,139,500 $1,230,500
Liabilities
"#$
Current liabilities
$ 210,000 $ 243,000 $ (33,000) (13.6%)
Long-term liabilities
100,000
200,000 (100,000) (50.0%)
Total liabilities
$ 310,000 $ 443,000 $(133,000) (30.0%)
Stockholders Equity
Preferred 6% stock, $100 par$ 150,000 $ 150,000

Common stock, $10 par

500,000
500,000

Retained earnings
179,500
137,500
$42,000
30.5%
Total stockholders equity $ 829,500 $ 787,500
$42,000
5.3%
Total liab. & SE
$1,139,500 $1230,500 $(91,000) (7.4%)

Lincoln Company
Comparative Income Statement
December 31, 2006 and 2005

ncome Statement

2006
2005
Sales
$1,530,500 $1,234,000
Sales returns
32,500
34,000
Net sales
$1,498,000 $1,200,000
Cost of goods sold
1,043,000
820,000
Gross profit
$ 455,000 $ 380,000
Selling expenses
$ 191,000 $ 147,000
Administrative expenses
104,000
97,400
Total operating expenses $ 295,000 $ 244,400
Operating income
$ 160,000 $ 135,600
Other income
8,500
11,000
$ 168,500 $ 146,600
Other expense
6,000
12,000
Income before income tax $ 162,500 $ 134,600
Income tax
71,500
58,100
Net income
$ 91,000 $ 76,500

ncrease (Decrease)
Amount
Percent
$296,500
24.0%
(1,500) (4.4%)
$298,000
24.8%
223,000
27.2%
$ 75,000
19.7%
$ 44,000
29.9%
6,600
6.8%
$ 50,600
20.7%
$ 24,400
18.0%
(2,500) (22.7%)
$ 21,900
14.9%
(6,000) (50.0%)
$ 27,900
20.7%
13,400
23.1%
$ 14,500
19.0%

Lincoln Company
Comparative ncome Statement
December 31, 2006 and 2005

ncrease (Decrease)
2006
2005
Amount
Percent
Sales
$1,530,500 $1,234,000 $296,500
24.0%
24.0%
Sales returns
32,500
34,000
(1,500) (4.4%)
Net sales
$1,498,000 $1,200,000 $298,000
24.8%
Cost of goods sold
1,043,000
820,000
223,000
27.2%
Gross profit
$ 455,000 $ 380,000 $ 75,000
19.7%
orizontal Analysis:
Selling expenses
$ 191,000 $ 147,000 $ 44,000
29.9%
Administrative expenses
104,000
6.8%
ncrease
amount97,400
$296,500 6,600
Total operating expenses $ 295,000 $ 244,400 $ 50,600
= 24.0%20.7%
Base
year (2005)
$1,234,000
Operating income
$ 160,000
$ 135,600
$ 24,400
18.0%
Other income
8,500
11,000
(2,500) (22.7%)
$ 168,500 $ 146,600 $ 21,900
14.9%
Other expense
6,000
12,000
(6,000) (50.0%)
Income before income tax $ 162,500 $ 134,600 $ 27,900
20.7%
Income tax
71,500
58,100
13,400
23.1%
Net income
$ 91,000 $ 76,500 $ 14,500
19.0%

Lincoln Company
Comparative ncome Statement
December 31, 2006 and 2005

ncrease (Decrease)
2006
2005
Amount
Percent
Sales
$1,530,500 $1,234,000 $296,500
24.0%
Sales returns
32,500
34,000
(1,500) (4.4%)
24.8%
Net sales
$1,498,000 $1,200,000 $298,000
24.8%
Cost of goods sold
1,043,000
820,000
223,000
27.2%
Gross profit
$ 455,000 $ 380,000 $ 75,000
19.7%
Selling expenses
$ 191,000 $ 147,000 $ 44,000
29.9%
Administrative expenses
104,000
97,400
6,600
6.8%
Total operating expensesorizontal
$ 295,000
$ 244,400 $ 50,600
20.7%
Analysis:
Operating income
$ 160,000 $ 135,600 $ 24,400
18.0%
Other income
8,500
ncrease
amount11,000
$298,000 (2,500) (22.7%)
= 24.8%14.9%
$ 168,500 $ 146,600 $ 21,900
Base year
(2005)12,000
$1,200,000(6,000) (50.0%)
Other expense
6,000
Income before income tax $ 162,500 $ 134,600 $ 27,900
20.7%
Income tax
71,500
58,100
13,400
23.1%
Net income
$ 91,000 $ 76,500 $ 14,500
19.0%

 
 


 

  
  



  
 





 
 
  %&&# 



 
' (

Lincoln Company
Comparative Balance Sheet
December 31, 2006
Amount Percent

Assets
Current assets
$ 550,000
Long-term investments
95,000
Property, plant, & equip. (net)
444,500
ntangible assets
50,000
Total assets
$1,139,500
Liabilities
Current liabilities
$ 210,000
Long-term liabilities
100,000
Vertical
Analysis:
Total
liabilities
$ 310,000
Stockholders Equity
Current assets $550,000
Preferred stock, 6%, $100 par $ 150,000 =
Totalstock,
assets
Common
$10 par $1,139,500
500,000
Retained earnings
179,500
Total stockholders equity
$ 829,500
Total liab. & SE
$1,139,500

u

V
December
31, 2005
Amount

Percent

48.3%
8.3
39.0
4.4
100.0%

$ 533,000
177,500
470,000
50,000
$1,230,500

43.3%
14.4
38.2
4.1
100.0%

18.4%
8.8
27.2%

$ 243,000
200,000
$ 443,000

19.7%
16.3
36.0%

13.2%
48.3%

$ 150,000
500,000
137,500
$ 787,500
$1,230,500

12.2%
40.6
11.2
64.0%
100.0%

43.9
15.7
72.8%
100.0%

Lincoln Company
Comparative Balance Sheet
December 31, 2006
Amount Percent

December 31, 2005

Amount Percent

Assets
Current assets
$ 550,000
48.3%
$ 533,000 43.3%
43.3%
Long-term investments
95,000
8.3
177,500
14.4
Property, plant, & equip. (net)
444,500
39.0
470,000
38.2
ntangible assets
50,000
4.4
50,000
4.1
Total assets
$1,139,500 100.0%
$1,230,500 100.0%
Liabilities
Current liabilities
$ 210,000
18.4%
$ 243,000
19.7%
Long-term liabilities
100,000
8.8
200,000
16.3
Vertical
Analysis:27.2%
Total liabilities
$ 310,000
$ 443,000
36.0%
Stockholders Equity
Current assets $533,000
Preferred 6% stock, $100 par $ 150,000
13.2%
$ 150,000
12.2%
= 43.3%
$1,230,500500,000
Common stock, $10 par Total assets
500,000
43.9
40.6
Retained earnings
179,500
15.7
137,500
11.2
Total stockholders equity
$ 829,500
72.8%
$ 787,500
64.0%
Total liab. & SE
$1,139,500 100.0%
$1,230,500 100.0%

Lincoln Company
Comparative Balance Sheet
December 31, 2006
Amount Percent

Assets
Current assets
Long-term investments
Property, plant, & equip. (net)
ntangible assets
Total assets
Liabilities
Current liabilities
Long-term liabilities
Total liabilities
Stockholders Equity
Preferred 6% stock, $100 par
Common stock, $10 par
Retained earnings
Total stockholders equity
Total liab. & SE

December 31, 2005

Amount Percent

$ 550,000
95,000
444,500
50,000
$1,139,500

48.3%
8.3
39.0
4.4
100.0%

$ 533,000
177,500
470,000
50,000
$1,230,500

43.3%
14.4
38.2
4.1
100.0%

$ 210,000
100,000
$ 310,000

18.4%
8.8
27.2%

$ 243,000
200,000
$ 443,000

19.7%
16.3
36.0%

$ 150,000
500,000
179,500
$ 829,500
$1,139,500

13.2%
43.9
15.7
72.8%
100.0%

$ 150,000
500,000
137,500
$ 787,500
$1,230,500

12.2%
40.6
11.2
64.0%
100.0%

Lincoln Company



Comparative Income Statement
V


For the Years Ended December 31, 2006 and 2005
2006
2005
Amount Percent
Amount Percent
Sales
$1,530,500
102.2% $1,234,000 102.8%
Sales returns
32,500
2.2
34,000
2.8
Net sales
$1,498,000
100.0% $1,200,000 100.0%
Cost of goods sold
1,043,000
69.6
820,000 68.3
Gross profit
$ 455,000
30.4% $ 380,000 31.7%
Selling expenses
$ 191,000 
12.8% $ 147,000 12.3%
Administrative expenses
104,000
6.9
97,400
8.1
Total operating expenses
$ 295,000 %&&&#
19.7% $ 244,400 20.4%
ncome from operations
$ 160,000
10.7
$ 135,600
11.3%
Other income
8,500
0.6
11,000
0.9
$ 168,500
11.3% $ 146,600 12.2%
Other expense
6,000
0.4
12,000
1.0
ncome before income tax
$ 162,500
10.9% $ 134,600
11.2%
ncome tax expense
71,500
4.8
58,100
4.8
Net income
$ 91,000
6.1% $ 76,500
6.4%

Lincoln Company
Comparative Income Statement
For the Years Ended December 31, 2006 and 2005
2006
2005
Amount Percent
Amount Percent
Sales
$1,530,500
102.2% $1,234,000 102.8%
Sales returns
32,500
2.2
34,000
2.8
Net sales
$1,498,000
100.0% $1,200,000 100.0%
Cost of goods sold
1,043,000
69.6
820,000 68.3
Gross profit
$ 455,000
30.4% $ 380,000 31.7%
Selling expenses
$ 191,000
12.8% $ 147,000 12.3%
Administrative expenses
104,000
6.9
97,400
8.1
Total operating expenses
$ 295,000
19.7% $ 244,400 20.4%
ncome from operations
$ 160,000
10.7
$ 135,600
11.3%
Other income
8,500
0.6
11,000
0.9
Vertical Analysis:
$ 168,500
11.3% $ 146,600 12.2%
Other expense
0.4
12,000
1.0
Selling expenses $191,0006,000
ncome before income tax
$ 162,500= 12.8%
10.9% $ 134,600
11.2%
Nettax
sales
$1,498,000
ncome
expense
71,500
4.8
58,100
4.8
Net income
$ 91,000
6.1% $ 76,500
6.4%

Lincoln Company
Comparative Income Statement
For the Years Ended December 31, 2006 and 2005
2006
2005
Amount Percent
Amount Percent
Sales
$1,530,500
102.2% $1,234,000 102.8%
Sales returns
32,500
2.2
34,000
2.8
Net sales
$1,498,000
100.0% $1,200,000 100.0%
Cost of goods sold
1,043,000
69.6
820,000 68.3
Gross profit
$ 455,000
30.4% $ 380,000 31.7%
Selling expenses
$ 191,000
12.8% $ 147,000 12.3%
Administrative expenses
104,000
6.9
97,400
8.1
Total operating expenses
$ 295,000
19.7% $ 244,400 20.4%
ncome from operations
$ 160,000
10.7
$ 135,600
11.3%
Other income
8,500
0.6
11,000
0.9
$ 168,500
11.3% $ 146,600 12.2%
Other expense
6,000
0.4
12,000
1.0
ncome before income tax
$ 162,500
10.9% $ 134,600
11.2%
ncome tax expense
71,500
4.8
58,100
4.8
Net income
$ 91,000
6.1% $ 76,500
6.4%

Lincoln Company
Comparative Income Statement
For the Years Ended December 31, 2006 and 2005
2006
2005
Amount Percent
Amount Percent
Sales
$1,530,500
102.2% $1,234,000 102.8%
Sales returns
32,500
2.2
34,000
2.8
Net sales
$1,498,000
100.0% $1,200,000 100.0%
Cost of goods sold
1,043,000
69.6
820,000 68.3
Gross profit
$ 455,000
30.4% $ 380,000 31.7%
Selling expenses
$ 191,000
12.8% $ 147,000 12.3%
Administrative expenses
104,000
6.9
97,400
8.1
Total operating expenses
$ 295,000
19.7% $ 244,400 20.4%
ncome from operations
$ 160,000
10.7
$ 135,600
11.3%
Other income
8,500
0.6
11,000
0.9
$ 168,500
11.3% $ 146,600 12.2%
Other expense
6,000
0.4
12,000
1.0
ncome before income tax
$ 162,500
10.9% $ 134,600
11.2%
ncome tax expense
71,500
4.8
58,100
4.8
Net income
$ 91,000
6.1% $ 76,500
6.4%

m


V V


 
    




    






 
 
 
  V 

 
  
 
 
  
  

  
!




m




V 

V



Solvency Analysis
Solvency is the ability of a business to
meet its financial obligations (debts) as
they are due.
Solvency analysis focuses on the ability
of a business to pay or otherwise
satisfy its current and noncurrent
liabilities.
This ability is normally assessed by
examining balance sheet relationships.

Current Position Analysis

Working Capital and Current Ratio
Current assets
Current liabilities
Working capital
Current ratio

2006
$550,000
210,000
$340,000
2.6

2005
$533,000
243,000
$290,000
2.2

)  
   


Divide
 

 
  
current

assets by
current
liabilities

Current Position Analysis

uick Ratio
uick assets:
Cash
Marketable securities
Accounts receivable (net)
Total
Current liabilities
uick ratio

2006

2005

$ 90,500
75,000
115,000
$280,500
$210,000
1.3

$ 64,700
60,000
120,000
$244,700
$243,000
1.0

)  
 


  

Accounts Receivable Analysis

Accounts Receivable Turnover
Net sales on account
Accounts receivable (net):
Beginning of year
End of year
Total
Average (Total 2)

2006
$1,498,000

2005
$1,200,000

$ 120,000
115,500
$ 235,000
$ 117,500

$ 140,000
120,000
$ 260,000
$ 130,000

Net sales on account

Average accounts
receivable

Accounts Receivable Analysis

Accounts Receivable Turnover
Net sales on account
Accounts receivable (net):
Beginning of year
End of year
Total
Average
Accounts receivable turnover

2006
$1,498,000

2005
$1,200,000

$ 120,000
115,500
$ 235,000
$ 117,500
12.7

$ 140,000
120,000
$ 260,000
$ 130,000
9.2

)    

 

 





  

Accounts Receivable Analysis

Number of Days Sales in Receivables
2006
Accounts receivable (net),
end of year
Net sales on account
Average daily sales on
account (sales 365)

2005

$ 115,000
$1,498,000

$ 120,000
$1,200,000

4,104


 
 
  



3,288

Accounts Receivable Analysis

Number of Days Sales in Receivables
2006
Accounts receivable (net),
end of year
Net sales on account
Average daily sales on
account (sales 365)
Number of days sales in
receivables

2005

$ 115,000
$1,498,000

$ 120,000
$1,200,000

4,104
28.0

3,288
36.5

)    

 

 





  

nventory Analysis
nventory Turnover
Cost of goods sold
nventories:
Beginning of year
End of year
Total
Average (Total 2)



  

*

2006
$1,043,000

2005
$ 820,000

$ 283,000
264,000
$ 547,000
$ 273,500

$ 311,000
283,000
$ 594,000
$ 297,000

m    
 

 

nventory Analysis
nventory Turnover
Cost of goods sold
nventories:
Beginning of year
End of year
Total
Average (Total 2)
nventory turnover

2006
$1,043,000

2005
$ 820,000

$ 283,000
264,000
$ 547,000
$ 273,500
3.8

$ 311,000
283,000
$ 594,000
$ 297,000
2.8

)    






 

 

nventory Analysis
Number of Days Sales in nventory
nventories, end of year
Cost of goods sold
Average daily cost of
goods sold
(COGS 365)

 
+V *



 

2006
$ 264,000
$1,043,000

2005
$283,000
$820,000

$ 2,247

2,858



  
 
      

nventory Analysis
Number of Days Sales in nventory
nventories, end of year
Cost of goods sold
Average daily cost of
goods sold
(COGS 365)
Number of days sales
in inventory

2006
$ 264,000
$1,043,000

2005
$283,000
$820,000

2,858

$ 2,247

92.4

125.9

)    






 

 

Long--Term Creditors
Long
Ratio of Fixed Assets to LongLong-Term Liabilities

Fixed assets (net)

Long-term liabilities
Ratio of fixed assets to
long--term liabilities
long

2006
$444,500
$100,000

2005
$470,000
$200,000

4.4

2.4

)  
 

 
 

  

Long--Term Creditors
Long
Ratio of Liabilities to Stockholders Equity
Total liabilities
Total stockholders equity
Ratio of liabilities to
stockholders equity

2006
$310,000
$829,500

2005
$443,000
$787,500

0.37

0.56

)  
 

  
  

Long--Term Creditors
Long
Number of Times nterest Charges Earned
ncome before income tax
Add interest expense
Amount available for interest

 


 *
m-


2006
2005
$ 900,000 $ 800,000
300,000
250,000
$1,200,000 $1,050,000



 


!,
!


!


Long--Term Creditors
Long
Number of Times nterest Charges Earned
ncome before income tax
Add interest expense
Amount available for interest
Number of times earned

2006
2005
$ 900,000 $ 800,000
300,000
250,000
$1,200,000 $1,050,000
4.0

)     



 

 





4.2

6    
 
6
    

  

  

    
  


 
 
  
  

    

6


   
 



 
 
 
 




 

  



The Common Stockholder

Ratio of Net Sales to Assets
Net sales
Total assets:
Beginning of year
End of year
Total
Average (Total 2)

2006
$1,498,000

2005
$1,200,000

$1,053,000
1,044,500
$2,097,500
$1,048,750

$1,010,000
1,053,000
$2,063,000
$1,031,500

-! 






The Common Stockholder

Ratio of Net Sales to Assets
Net sales
Total assets:
Beginning of year
End of year
Total
Average (Total 2)
Ratio of net sales to assets

2006
$1,498,000

2005
$1,200,000

$1,053,000
1,044,500
$2,097,500
$1,048,750

$1,010,000
1,053,000
$2,063,000
$1,031,500

1.4

)   
 
  

1.2

The Common Stockholder

Rate Earned on Total Assets
Net income
Plus interest expense
Total
Total assets:
Beginning of year
End of year
Total
Average (Total 2)
Rate earned on total assets

2006
$ 91,000
6,000
$ 97,000

2005
$ 76,500
12,000
$ 88,500

$1,230,500
1,139,500
$2,370,000
$1,185,000
8.2%

$1,187,500
1,230,500
$2,418,000
$1,209,000
7.3%

)       

The Common Stockholder

Rate Earned on Stockholders Equity
Net income
Stockholders equity:
Beginning of year
End of year
Total
Average (Total 2)
Rate earned on stockholders
equity

2006
$ 91,000

2005
$ 76,500

$ 787,500
829,500
$1,617,000
$ 808,500

$ 750,000
787,500
$1,537,500
$ 768,750

11.3%

10.0%

)       



  

The Common Stockholder

Rate Earned on Common Stockholders Equity
Net income
Less preferred dividends
Remaindercommon stock
Common stockholders equity:
Beginning of year
End of year
Total
Average (Total 2)

$
$

2006
91,000
9,000
82,000

$ 637,500
679,500
$1,317,000
$ 658,500

$
$

2005
76,500
9,000
67,500

$ 600,000
637,500
$1,237,500
$ 618,750

The Common Stockholder

Rate Earned on Common Stockholders Equity
Net income
Less preferred dividends
Remaindercommon stock
Common stockholders equity:
Beginning of year
End of year
Total
Average (Total 2)
Rate earned on common
stockholders equity

$
$

2006
91,000
9,000
82,000

$
$

2005
76,500
9,000
67,500

$ 637,500
679,500
$1,317,000
$ 658,500

$ 600,000
637,500
$1,237,500
$ 618,750

12.5%

10.9%

)       






  

The Common Stockholder

Earnings Per Share on Common Stock
Net income
Less preferred dividends
Remaindercommon stock
Shares of common stock
Earnings per share on common stock

2006
$ 91,000
9,000
$ 82,000
50,000
$1.64

2005
$ 76,500
9,000
$ 67,500
50,000
$1.35

)       






  

The Common Stockholder

Price--Earnings Ratio
Price
2006
Market price per share of common
$41.00
Earnings per share on common
1.64
Price--earnings ratio on common stock
Price
25

2005
$27.00
1.35
20

)  
   


 

 


   



 




The Common Stockholder

Dividend Yield on Common Stock
Dividends per share of common
Market price per share of common
Dividend yield on common stock

2006
$ 0.80
41.00
1.95%

2005
$ 0.60
27.00
2.22%

)  
   
 



  

  


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