CARLA VISTA COMPANY Balance Sheets December 31 Assets 2022 2021 Cash $ 70,000 51,000 $67,000 41,000 Debt investments (short-term) Accounts receivable 104,000 90,000 Inventory 230,000 164,000 Prepaid expenses 22,000 23,000 Land 133,000 133,000 Building and equipment (net) 262,000 185,000 Total assets $872,000 $703,000 Liabilities and Stockholders' Equity Notes payable Accounts payable $172,000 $102,000 66,000 51,000 39,000 39,000 Accrued liabilities Bonds payable, due 2025 249,000 169,000 Common stock, $10 par 210,000 210,000 Retained earnings 136,000 132,000 Total liabilities and stockholdersequity $872,000 $703,000 CARLA VISTA COMPANY Income Statements For the Years Ended December 31 2022 2021 Sales revenue $908,000 $796,000 647,000 576,000 Cost of goods sold Gross profit 261,000 220,000 Operating expenses 194,000 160,000 $ 67,000 $60,000 Net income Additional information: 1. Inventory at the beginning of 2021 was $117,000. 2. Accounts receivable (net) at the beginning of 2021 were $90,000. 3. Total assets at the beginning of 2021 were $631,000. 4. No common stock transactions occurred during 2021 or 2022. 5. All sales were on account. (a 1) Compute the liquidity and profitability ratios of Carla Vista Company for 2021 and 2022. (Round Curent ratio, Asset turnover and Earnings per share to 2 decimal places, e.g. 15.50 and round all other answers to 1 decimal place, e.g. 15.5. Round % change to O decimal places, for e.g. 1% and if % change is a decrease show the numbers as negative, e.g. -1% or (1%).) 2021 2022 % Change LIQUIDITY Current ratio 2.00 1.72 -14.1 Accounts receivables turnover 8.84 times 9.36 times 5.8 Inventory turnover 4.09 times 3.28 times -19.9 2021 2022 % Change PROFITABILITY Profit margin 7.4 % 7.5 % -2.1 Asset turnover times 1.2 times -3.4 Return on assets 9.0 % 8.5 -5.4 Earnings per share $ 2.9 3.3 16.1 % Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2022, and (2) as of December 31, 2023, after giving effect to the situation. (Round Debt to assets ratio to O decimal places, e.g. 15 and round all other answers to 1 decimal place, e.g. 15.5. Round % change to 0 decimal places, for e.g. 1% and if % change is a decrease show the numbers as negative, e.g. -1% or (1%).) Situation Ratio 1. 19,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $52,000. Return on common stockholders' equity Debt to assets ratio All of the notes payable were paid in 2023. All other liabilities remained at their December 31. 2022 levels. Total assets on December 31, 2023, were $864,000. 3. The market price of common stock was $9 and $13 on December 31, 2022 and 2023, respectively. Price-earnings ratio 2022 2023 % Change Return on common stockholders' equity 19.5 % 11.2.5 % -42.3 Debt to assets ratio 60.5 % 31.65 % -47.8 Price earnings ratio 3,2 times 1.62 times -48.6
