Question
Q33 The Harrison Bicycle Company had the following operating results for 2021-2022. In addition, the company paid dividends in both 2021 and 2022 of $120,000
Q33
The Harrison Bicycle Company had the following operating results for 2021-2022. In addition, the company paid dividends in both 2021 and 2022 of $120,000 per year and made capital expenditures in both years of $230,000 per year. The company's stock price in 2021 was $14.20 and $12.50 in 2022. Also in 2022, the industry average earnings multiple for the bicycle industry was 8 and the free cash flow and sales multiples were 16 and 1.35, respectively. The company is publicly owned and has 1,400,000 shares of outstanding stock at the end of 2022.
Balance Sheet, December 31, | ||
2022 | 2021 | |
---|---|---|
Cash | $ 276,000 | $ 109,000 |
Accounts Receivable | $ 534,000 | $ 409,000 |
Inventory | $ 459,000 | $ 309,000 |
Total Current Assets | $ 1,269,000 | $ 827,000 |
Long-lived Assets | 1,250,000 | 1,145,000 |
Total Assets | $ 2,519,000 | $ 1,972,000 |
Current Liabilities | $ 509,000 | $ 309,000 |
Long-term Debt | 690,000 | 590,000 |
Shareholder Equity | 1,320,000 | 1,073,000 |
Total Debt and Equity | $ 2,519,000 | $ 1,972,000 |
Income Statement, for year ended December 31, | ||
2022 | 2021 | |
---|---|---|
Sales | $ 6,200,000 | $ 5,420,000 |
Cost of Sales | 5,095,000 | 4,390,000 |
Gross Margin | 1,105,000 | 1,030,000 |
Operating Expenses | 510,000 | 450,000 |
Operating Income | 595,000 | 580,000 |
Taxes | 228,000 | 198,000 |
Net Income | $ 367,000 | $ 382,000 |
Cash Flow From Operations | 2022 | 2021 |
---|---|---|
Net Income | $ 367,000 | $ 382,000 |
Plus Depreciation Expense | 125,000 | 125,000 |
+ Decrease (-increase) in Account Receivable and Inventory | (275,000) | 0 |
+ Increase (-decrease) in Current Liabilities | 200,000 | 0 |
Cash Flow from Operations | $ 417,000 | $ 507,000 |
The book value of the company's equity for 2022 is:
Multiple Choice
-
$1,320,000
-
$1,045,000
-
$1,593,000
-
$2,493,000
-
$8,356,500
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started