Problem 13-04A

The following financial information is for Carla Vista Company.

CARLA VISTA COMPANY Balance Sheets December 31

Assets

2022

2021

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 2025

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
		2022		2021
Sales revenue		$908,000		$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 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.

(a1) 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 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		enter the current ratio	:1		enter the current ratio	:1		enter percentages	%
Accounts receivables turnover		enter accounts receivables turnover in times	times		enter accounts receivables turnover in times	times		enter percentages	%
Inventory turnover		enter inventory turnover in times	times		enter inventory turnover in times	times		enter percentages	%

2021

2022

% Change

PROFITABILITY

Profit margin

enter percentages

%

enter percentages

%

enter percentages

%

Asset turnover

enter asset turnover in times

times

enter asset turnover in times

times

enter percentages

%

Return on assets

enter percentages

%

enter percentages

%

enter percentages

%

Earnings per share

$enter a dollar amount

$enter a dollar amount

enter percentages

(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.		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
2.		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.		Debt to assets ratio
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		enter percentages	%		enter percentages	%		enter percentages	%
Debt to assets ratio		enter percentages	%		enter percentages	%		enter percentages	%
Price earnings ratio		enter a price earnings ratio in times	times		enter a price earnings ratio in times	times		enter percentages	%

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