CULLUMBER COMPANY Balance Sheets December 31 Assets 2022 2021 Cash $ 70,000 $ 64,000 Debt investments (short-term) 53,000 39,000 Accounts receivable 108,000 90,000 Inventory 229,000 162,000 Prepaid expenses 30,000 25,000 Land 130,000 130,000 Building and equipment (net) 264,000 185,000 Total assets $884,000 $695,000 Liabilities and Stockholders' Equity Notes payable $172,000 $ 102,000 Accounts payable 65,000 51,000 Accrued liabilities 41,000 41,000 Bonds payable, due 2025 250,000 172,000 Common stock, $10 par 202,000 202,000 Retained earnings 154,000 127,000 Total liabilities and stockholders' equity $884,000 $695,000 CULLUMBER COMPANY Income Statements For the Years Ended December 31 2022 2021 Sales revenue $890,000 $786,000 Cost of goods sold 641,000 575,000 Gross profit 249,000 211,000 Operating expenses 194,000 159,000 Net income $ 55,000 $ 52,000 Additional information: 1. Inventory at the beginning of 2021 was $116,000. 2. Accounts receivable (net) at the beginning of 2021 were $90,000. 3. Total assets at the beginning of 2021 were $642,000. 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 Cullumber 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 0 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 1.96 :1 1.76 :1 20 % Accounts receivables turnover 8.80 times 8.99 times -19 % Inventory turnover 4.10 times 3.30 times 80 % 2021 2022 % Change PROFITABILITY Profit margin 6.62 % 6.18 % Asset turnover 1.18 times 1.13 times 5 mann Return on assets 7 % 7 % Earnings per share $ 2.57 $ 2.72 - 15 (b) 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 0 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. 18,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $53,000. Return on common stockholders' equity 2. 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 $904,000. 3. Price-earnings ratio The market price of common stock was $9 and $13 on December 31, 2022 and 2023, respectively. 2022 2023 % Change Return on 16.1 % 11.7 % 4.4 % common stockholders' equity Debt to assets 47.7 % 27.7 % -42 % ratio Price earnings ratio 3.3 times 4.4 times 33 %