The following data is available for Everest Company: Credit Sales $1,702
Net Income $112
Total Current Assets $366
Total Current Liabilities $226
Accounts Receivable, current year $160
Accounts Receivable, prior year $156
Total Stockholders' Equity, current year $550
Total Stockholders' Equity, prior year $500
Retained Earnings, current year $366
Retained Earnings, prior year $346
Market price per share $50
Average Number of Common Shares Outstanding during year 46
Required: Compute the following ratios:
A) current ratio
B) average collection period in days
C) return on stockholders' equity
D) price-earnings ratio
E) dividend yield

a. Current ratio = Total current assets / Total current liabilities = $366 / $226 = 1.62 to 1

b. Average receivable = (Beginning receivables + Ending receivables) / 2 = ($156 + $160) / 2 = $158

Average collection period = Number of days in year / Credit sales * Average accounts receivable = 365 / $1,702 * $158 = 33.88 days

c. Average Stockholder's equity =   (Beginning equity + Ending equity) / 2 = ($500 + $550) / 2 = $525

Return on stockholder's equity =  Net income / Average stockholder's equity = $112 / $525 = 21.33%  

d. Earnings per share = Net income / Common shares outstanding = $112 / 46 = $2.43 per share

Price earnings ratio = Market price per share / Earnings per share = $50 / $2.43 = 20.58 times

e. Dividends per share = Dividends / Common shares outstanding = $92 / 46 = $2.00 per share

Dividend yield ratio = Dividend per share / Market price per share = $2.00 / $50 = 4.00%

Workings

Beginning retained earnings$346

Add: Net income                            $112

Less: Ending retained earnings   -$366

Dividends                                        $92

d, conspicuous consumption is when you try to increase your wealth or social status (and in the case he's trying to create the perception of wealth considering he can't really afford it)

answer; (inseparability);