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CARLA VISTA COMPANY Balance Sheets December 31 Assets 2019 2018 Cash $ 70,000 $ 67,000 Debt investments (short-term) 51,000 41,000 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 $172,000 $102,000 Accounts payable 66,000 51,000 Accrued liabilities 39,000 39,000 Bonds payable, due 2022 249,000 169,000 Common stock, $10 par 210,000 210,000 Retained earnings 136,000 132,000 Total liabilities and stockholders' equity $872,000 $703,000 CARLA VISTA COMPANY Income Statements For the Years Ended December 31 2019 2018 Sales revenue $900,000 $796,000 Cost of goods sold 647,000 576,000 Gross profit 261,000 220,000 Operating expenses 194,000 160,000 Net Income $ 67,000 $60,000 Additional information: 1. Inventory at the beginning of 2018 was $117,000. 2. Accounts receivable (net) at the beginning of 2018 were $90,000. 3. Total assets at the beginning of 2018 were $631,000. 4. No common stock transactions occurred during 2018 or 2019. 5. All sales were on account. (a1) Compute the liquidity and profitability ratios of Carla Vista Company for 2018 and 2019. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%. If % change is a decrease show the numbers as negative, e.g. -1.83% or (1.83%).) (a1) Compute the liquidity and profitability ratios of Carla Vista Company for 2018 and 2019. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%. If % change is a decrease show the numbers as negative, e.g. - 1.83% or (1.83%).) 2018 2019 % Change LIQUIDITY Current ratio Accounts receivables turnover 2.17 8.84 times 4.10 | times 2019 1.721 +1 -20.1% 9.36 times 5.8% 3.28 times -19.9% % Change Inventory turnover 2018 PROFITABILITY Profit margin Asset turnover 7.54% 1.2 times 9% 2.86 7.38% 1.15 times 8.51% 2.1% -3.4% -5.4 | -11.54 1 Return on assets Earnings per shared (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, 2019, and (2) as of December 31, 2020, after giving effect to the situation. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%. If % change is a decrease show the numbers as negative, e.g. -1.83% or (1.83%).) Situation Ratio 1. 19,000 shares of common stock were sold at par on July 1, 2020. Net Income for 2020 was $52,000. Return on common stockholders' equity 2. All of the notes payable were paid in 2020. All other liabilities remained at their December 31, 2019, levels. At December 31, 2020, total assets were $864,000. Debt to assets ratio 3. The market price of common stock was $9.00 and $13.00 on December 31, 2019 and 2020, respectively. Net income for 2020 was $52,000. Price-earnings ratio Return on common stockholders' equity 2019 19.48% .42% 3.15 times 1 2020 13.98% 30% 7.63 times % Change -28.23% -63.42% 142.22% Debt to assets ratio Price earnings ratio Click if you would like to Show Work for this question: Open Show Work
