14-4A (Part Level Submission) The following financial information is for Priscoll Company. Priscoll Company Balance Sheets December 31 Assets Cash Debt investments (short-term) Accounts receivable Inventory Prepaid expenses Land 2020 2019 $ 135,800 $ 126,100 106,700 201,760 77,600 174,600 446,200 320,100 48,500 44,620 252,200 252,200 Building and equipment (net) 504,400 Total assets $1,695,560 358,900 $1,354,120 Liabilities and Stockholders' Equity Notes payable (short-term) $329,800 $232,800 Accounts payable 126,100 100,880 Accrued liabilities 77,600 77,600 Bonds payable, due 2023 Common stock, $10 par Retained earnings 485,000 329,800 388,000 289,060 388,000 225,040 Total liabilities and stockholders' equity $1,695,560 $1,354,120 Sales revenue Cost of goods sold $1,711,080 1,241,600 Priscoll Company Income Statement For the Years Ended December 31 2020 2019 $1,532,600 1,115,500 Gross profit 469,480 Operating expenses 368,600 417,100 323,980 Net income $ 100,880 $ 93,120 Additional information: 1. Inventory at the beginning of 2019 was $223,100. 2. Accounts receivable (net) at the beginning of 2019 were $166,840. 3. Total assets at the beginning of 2019 were $1,280,400. 4. No common stock transactions occurred during 2019 or 2020. 5. All sales were on account. (a) Your answer is correct. Indicate, by using ratios, the change in liquidity and profitability of Priscoll Company from 2019 to 2020. (Round Current ratio, Asset turnover and Earnings per share to 2 decimal places, e.g. 1.65, and all other answers to 1 decimal place, e.g. 6.8 or 6.8%.) LIQUIDITY 2019 2020 Current ratio 1.81:1 1.76:1 Accounts receivable turnover 8.98 times 9.09 times Inventory turnover 4.11 times 3.24 times PROFITABILITY Profit margin Asset turnover Return on assets Earnings per share 6.08 % 5.90 % 1.16 times 1.12 times 7.07% 6.62 % 2.40 2.60 (b) The following are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2020, and (2) as of December 31, 2021, after giving effect to the situation. (Round debt to assets ratio to 0 decimal places, e.g. 15% and other answers to 1 decimal place, e.g. 6.8 or 6.8%.) Situation (1) 34,920 shares of common stock were sold at par on July 1, 2021. Net income for 2021 was $104,760. (2) All of the notes payable were paid in 2021. All other liabilities remained at their December 31, 2020, levels. At December 31, 2021, total assets were $1,746,000. (3) The market price of common stock was $17 and $23 on December 31, 2020 and 2021, respectively. Net income for 2021 was $104,760. Ratio Return on common stockholders' equity Debt to assets ratio Price-earnings ratio 2020 Return on common stockholders' equity % Debt to assets ratio % Price-earnings ratio times 2021 % % times