The following financial information is for Cullumber Company. CULLUMBER COMPANY Balance Sheets December 31 Assets 2022 Cash $72,000 Debt investments (short-term) 51,000 Accounts receivable 109,000 Inventory 237,000 Prepaid expenses 28.000 Land 131,000 Building and equipment (net) 259,000 Total assets $887,000 Liabilities and Stockholders' Equity Notes payable (short-term) $169,000 Accounts payable 69,000 Accrued liabilities 41,000 Bonds payable, due 2025 252,000 Common stock, $10 par 209,000 Retained earnings 147.000 Total liabilities and stockholders' equity $887,000 2021 $68,000 42,000 92,000 169.000 25,000 131,000 186,000 $713,000 $109,000 50,000 41,000 170,000 209,000 134,000 $713,000 CULLUMBER COMPANY Income Statements For the Years Ended December 31 -71 CULLUMBER COMPANY Income Statements For the Years Ended December 31 2022 2021 Sales revenue $895,000 $789.000 Cost of goods sold 646,000 576,000 Gross profit 249,000 213,000 Operating expenses 192.000 159,000 Net income $57.000 $ 54,000 Additional information: 1 2. 3. 4. 5. Inventory at the beginning of 2021 was $117.000. Accounts receivable (net) at the beginning of 2021 were $90,000, Total assets at the beginning of 2021 were $634,000, No common stock transactions occurred during 2021 or 2022 All sales were on account (a1) Compute the liquidity and profitability ratios of Cullumber Company for 2021 and 2022. (Round current ratio, asset turnover and earnings per share to 2 decimal places, eg. 1.83 or 1.83%, Round accounts receivables turnover, inventory turnover, profit margin and return on assets to 1 decimal place. es. 1.8 or 1.8%. Round % change to O decimal place, eg. 25%. If % change is a decrease show the numbers as negative, eg.-25% or (25)%) Chan 2022 2021 (a1) Compute the liquidity and profitability ratios of Cullumber Company for 2021 and 2022. (Round current ratio, asset turnover and earnings per share to 2 decimal places, eg. 1.83 or 1.83%. Round accounts receivables turnover, inventory turnover, profit margin and return on assets to 1 decimal place, e.g. 1.8 or 1.8%. Round % change to decimal place, e.g. 25%. If % change is a decrease show the numbers as negative, eg. -25% or (25)%) 2021 2022 x Chan :1 LIQUIDITY Current ratio Accounts receivables turnover Inventory turnover times times times times 2021 2022 X Change % % times times PROFITABILITY Profit margin Asset turnover Return on assets Earnings per share 96 X $ (b) (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, 2022, and (2) as of December 31, 2023, after giving effect to the situation. (Round return on common stockholders' equity and price earnings ratio to 1 decimal place, eg. 1.8 or 1.8%. Round debt to assets ratio and % change to decimal place, 6.3. 25%. 16% change is a decrease show the numbers as negative, e.g. -25% or (25)%) 1. Situation 20,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $55,000 All of the notes payable were paid in 2023. All other liabilities remained at their December 31, 2022, levels. At December 31, 2023, total assets were $877.000. The market price of common stock was $9 and $12 on December 31, 2022 and 2023, respectively. Net income for 2023 was $55,000. Ratio Return on common stockholders' equity Debt to assets ratio 2. 3 Price-earnings ratio 2022 2023 % % Return on common stockholders equity Debt to assets ratio Price earnings ratio % X times times e Textbook and Media Save for Later Last saved 13 minutes ago. Attempts: 0 of 3 used Submit Answer (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, 2022, and (2) as of December 31, 2023, after giving effect to the situation. (Round return on common stockholders equity and price earnings ratio to 1 decimal place, eg. 1.8 or 1.8% Round debt to assets ratio and % change to O decimal place, eg 25%. If % change is a decrease show the numbers as negative, eg. -25% or (25)%) Situation Ratio 1. 20,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was Return on common $55,000. stockholders' equity 2. All of the notes payable were paid in 2023. All other liabilities remained at their December 31. Debt to assets ratio 2022 levels, At December 31, 2023, total assets were $877.000. The market price of common stock was $9 and $12 on December 31, 2022 and 2023. Price-earnings ratio respectively. Net income for 2023 was $55,000. 3 2022 2023 Change %% 93 ockholders' equity % % % times times
