The Following Information Applies to Acorn Construction Company (ACC) Information on the Number of Shares Outstanding Is Provided Below

Essay

The following information applies to Acorn Construction Company (ACC):
$\begin{array}{lrr}&\text { Year } 2 & \text { Year } 1\\\text { Net sales } & \$ 880,000& \$ 600,000 \\\text { Income before interest and taxes } & 127,500& 84,000 \\\text { Net income } & 59,000 & 52,000 \\\text { Interest expense } & 24,500 & 15,000 \\\text { Stockholder's' equity, December 31 } & 810,300& 725,000 \\\text { Common stock } & 750,300 & 700,000 \\\text { Preferred stock dividends } & 24,000 & 24,000\end{array}$
Information on the number of shares outstanding is provided below:
$$\begin{array} { | l | l |} \hline \text { Ave. \# of shares outstanding Year 1 } & 38,000 \\\hline \text { Ave. \# of shares outstanding Year 2 } & 33,000 \\\hline\end{array}$$ Required:
Compute the following ratios for ACC for Year 2 and Year 1:
(a)Number of times interest is earned
(b)Earnings per share
(c)Price-earnings ratio (Market prices: Year 2 $17.50 per share,Year 1 $15.00 per share)
(d)Return on equity
(e)Net margin.