Comparative financial statements for Oriole and Sheffield Ltd. are shown below. ORIOLE AND SHEFFIELD LTD. Income Statement Year Ended December 31 2021 2020 Net sales $860,000 $800,000 Cost of goods sold 595,000 545,000 Gross profit 265,000 255,000 Operating expenses 159.000 155,000 Profit from operations 106,000 100,000 Other revenues and expenses Interest expense 40,000 20,000 Profit before income tax 66,000 80,000 Income tax expense 2,000 25,000 Profit $64,000 $55,000 ORIOLE AND SHEFFIELD LTD. Balance Sheet December 31 Assets 2021 2020 2019 $94,000 $87,000 $10,000 Cash Accounts receivable 87,000 83,000 101,000 Inventories 145,000 140,000 97.000 25,000 25,000 113,000 390,000 305,000 300,000 $741,000 $640,000 $621,000 $110,000 $100,000 40,000 Prepaid expenses Land, buildings, and equipment Total assets Liabilities and Shareholders' Equity Liabilities Notes payable Accounts payable Accrued liabilities Bonds payable, due 2024 Total liabilities Shareholders' equity Common shares (20,000 issued) Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 43,000 32,000 45,000 150,000 $100,000 50,000 30.000 182,000 362,000 190,000 375,000 335,000 200,000 200.000 166,000 105,000 305,000 200,000 59,000 259,000 366,000 $741,000 $640,000 $621,000 Additional information: 1. 2 3. Seventy-five percent of the sales were on account. The allowance for doubtful accounts was $4,000 in 2021, $5,000 in 2020, and $3,000 in 2019. In 2021 and 2020, dividends of $3,000 and $9,000, respectively, were paid to the common shareholders. Cash provided by operating activities was $103.500 in 2021 and $128,000 in 2020. Cash used by investing activities was $114,000 in 2021 and $33,000 in 2020. 4. 5. Profitability Ratios 11. Gross profit margin 30.8 % 319 % 12. Profit margin 7.4 % 6.9 % 13. Asset turnover 12 times 13 times 14. Return on assets 9.3 % 8.7 % 15. Return on equity 17.5 % 18.0 % 16. Earnings per share $ 3.2 $ 28 17. Payout ratio 4.7 %6 16.4 % Calculate all possible liquidity, solvency, and profitability ratios for 2021 and 2020. (Round answers for Collection period, Days sales in inventory, Operating cycle and Free cash flow to decimal places, eg. 125. Round answer for Earnings per share to 2 decimal places, eg. 12.50. Round all other answers to 1 decimal place, eg. 12.5 or 12.5%. Enter negative amount using either a negative sign preceding the number eg.-45 or parentheses eg. (45).) 2021 2020 Liquidity Ratios 1. Current ratio 19 :1 18 : 1 2. Acid-test ratio 0.98 : 1 0.92 : 1 3. Receivables turnover 7.6 times 6.5 times 4. Collection period 48 days 56 days 5. Inventory turnover 5.9 times 5.7 times 6. Days sales in inventory 87 days 79 days 7. Operating cycle 135 days 135 days Solvency Ratios 8. Debt to total assets 50.60 % 52.34 % 9. Interest coverage 2.65 times 5 times 10. Free cash flow $ - 13500 $ 86000
