JERGAN CORPORATION
	Balance Sheet
	December 31
				2022	2021	2020
	Cash			$30,000	$20,000	$18,000
	Accounts receivable (net)	50,000	45,000	48,000
	Other current assets		90,000	95,000	64,000
	Investments		55,000	70,000	45,000
	Plant and equipment (net)	500,000	370,000	358,000
				$725,000	$600,000	$533,000
	Current liabilities		$85,000	$80,000	$70,000
	Long-term debt		145,000	85,000	50,000
	Common stock, $10 par	320,000	310,000	300,000
	Retained Earnings		175,000	125,000	113,000
				$725,000	$600,000	$533,000
	JERGAN CORPORATION
	Income Statement
	For the Year Ended December 31
					2022	2021
	Sales revenue			$740,000	$600,000
	Less: Sales return and allowances		40,000	30,000
	Net sales				700,000	570,000
	Cost of goods sold			425,000	350,000
	Gross profit			275,000	220,000
	Operating expenses (including income taxes)	180,000	150,000
	Net income			95,000	70,000
Additional information:
1.	The market price of Jergan's common stock was $7.00, $7.50, and $8.50 for 2020,
	2021, and 2022, respectively.
2.	You must compute dividends paid. All dividends were paid in cash.
Instructions
a.	Compute the following ratios for 2021 and 2022.
	1. Profit margin.		5. Price-earnings ratio.
	2. Gross profit rate.		6. Payout ratio.
	3. Asset turnover.		7. Debt to assets ratio.
	4. Earnings per share.
b.	Based on the ratios calculated, discuss briefly the improvement or lack thereof in the financial
	position and operating results from 2021 to 2022 of Jergan Corporation.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
a.
1	Profit margin
				2022	2021
	Net income		$95,000	$70,000
	Net sales			$700,000	$570,000
	Profit margin		13.6%	12.3%
2	Gross profit rate
				2022	2021
	Gross profit		$275,000	$220,000
	Net sales			$700,000	$570,000
	Gross profit rate		39.0%	38.0%
3	Asset turnover
				2022	2021
	Total assets, 2022		$725,000
	Total assets, 2021		$600,000	Value
	Total assets, 2020		$533,000	Value
	Average total assets		?	?
				2022	2021
	Net sales			$700,000	$570,000
	Average total assets		Value	Value
	Asset turnover		?	?
4	Earnings per share
				2022	2021
	Common shares outstanding, 2022	Value
	Common shares outstanding, 2021	Value	Value
	Common shares outstanding, 2020		Value
	Average common shares outstanding	?	?
				2022	2021
	Net income - Pfd. Dividends	Value	Value
	Average common shares outstanding	Value	Value
	Earnings per share		?	?
5	Price-earnings ratio
				2022	2021
	Stock price per share	Value	Value
	Earnings per share		Value	Value
	Price-earnings ratio		?	?
6	Payout ratio
				2022	2021
	Prior year's retained earnings	Value	Value
	Plus: current year net income	Value	Value
	Less: current year's retained earnings	Value	Value
	Cash dividends declared	?	?
				2022	2021
	Cash dividends declared (common)	Value	Value
	Net income		Value	Value
	Payout ratio		?	?
7	Debt to assets ratio
				2022	2021
	Current Liabilities		Value	Value
	Long-term debt		Value	Value
	Total liabilities		?	?
	Total assets		Value	Value
	Debt to assets ratio		?	?
After you have completed P10-3, consider the additional question.
	Assume that 2022 net income and total assets changed to $87,000 and total assets to
	$700,000. Show the impact of these changes on the ratios.