Problem 13-04A Your answer is partially correct. Try again. The following financial information is for Carla Vista Company. CARLA VISTA COMPANY Balance Sheets December 31 Assets 2022 Cash $ 69,000 Debt investments (short-term) 53,000 Accounts receivable 106,000 Inventory 238,000 Prepaid expenses 24,000 Land 134,000 Building and equipment (net) 259,000 Total assets $883,000 Liabilities and Stockholders' Equity Notes payable $171,000 Accounts payable 66,000 Accrued liabilities 40,000 Bonds payable, due 2025 250,000 Common stock, $10 par 208,000 Retained earnings 148,000 Total liabilities and stockholders' equity 2021 $ 69,000 42,000 90,000 163,000 27,000 134,000 183,000 $708,000 $103,000 54,000 40,000 169,000 208,000 134,000 $708,000 CARLA VISTA COMPANY Income Statements For the Years Ended December 31 2022 2021 Sales revenue $890,000 $795,000 Cost of goods sold 641,000 576,000 Gross profit 249,000 219,000 Operating expenses 192,000 165,000 Net income $ 57,000 $ 54,000 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 $634,000. 4. No common stock transactions occurred during 2021 or 2022. 5. All sales were on account. (al) 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 o 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 1.98.1 1.77 Accounts receivables turnover 8.83 times mes C 4.13 times 0.08 times 1 3:20 times 2.73 20.15) Inventory turnover 2021 2022 % Change PROFITABILITY Profit margin 6.79% 7 6.4% 1 6.06% 6.06 * Asset turnover 1 times tim Return on assets 6.79% 6.4|| % Earnings per shares (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 o decimal places, e.g. 15 and round all other answers to 1 decimal place, e.g. 15.5. Round % change to o 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. 20,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $51,000. 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 $876,000. Debt to assets ratio 3. The market price of common stock was $9 and $12 on December 31, 2022 and 2023, respectively. Price-earnings ratio 2022 2023 % Change Return on common stockholders' equity 15.92 8.37% 90.12 Debt to assets ratio 47.68 % 28.54% Price earnings ratio 3.28 times 7.25 times
