Question 9 of 10 > View Policies Current Attempt in Progress The following financial information is for Ivanhoe Company. IVANHOE COMPANY Balance Sheets December 31 Assets 2022 2021 Cash $ 71,000 $ 66,000 Debt investments (short-term) 52,000 40,000 Accounts receivable 110,000 91,000 Inventory 233,000 165,000 Prepaid expenses 25,000 27,000 Land 130,000 130,000 Building and equipment (net) 259,000 184,000 Total assets $880,000 $703,000 Liabilities and Stockholders' Equity Notes payable $171,000 $110,000 Accounts payable 68,000 53,000 Accrued liabilities 39,000 39,000 Bonds payable, due 2025 249,000 169,000 Common stock, $10 par 207,000 207,000 Retained earnings 146,000 125,000 Total liabilities and stockholders' equity $880,000 $703,000 IVANHOE COMPANY Income Statements For the Years Ended December 31 2022 2021 Sales revenue $895,000 $793,000 Cost of goods sold 640,000 574,000 Gross profit 255,000 219,000 Operating expenses 190,000 161,000 Net income $ 65,000 $ 58,000 (a 1) Compute the liquidity and profitability ratios of Ivanhoe 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 1.93 :1 1.77 :1 -8 % Accounts receivables turnover 8.9 times 8.9 times 0 % Inventory turnover 4.1 times 3.3 times -20 % 2021 2022 % Change PROFITABILITY Profit margin 7.3 % 7.3 % 0 % Asset turnover 1.19 times 113 times -5 % Return on assets 8.7 % 8.2 % -6 % Earnings per share $ 2.8 $ 3.14 12 % (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 decimal places, e.g. 15 and round all other answers to 1 decimal place, e.g. 15.5. Round % change to decimal places, for e.g. 1% and if % change is a decrease show the numbers as negative, e.g. -1% or (1%).) Situation Ratio Return on common stockholders' equity 1. 2. Debt to assets ratio 20,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $52,000. 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 $881,000. The market price of common stock was $9 and $13 on December 31, 2022 and 2023, respectively. 3. Price-earnings ratio 2022 2023 % Change Return on common stockholders' equity % % % Debt to assets ratio % % Price earnings ratio times times %
