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The following financial information is for Priscoll Company. Priscoll Company Balance Sheets December 31 Assets 2020 2019 Cash $ 70,000 $ 65,000 Debt investments (short-term)

The following financial information is for Priscoll Company.

Priscoll Company Balance Sheets December 31

Assets

2020

2019

Cash $ 70,000 $ 65,000
Debt investments (short-term) 55,000 40,000
Accounts receivable 104,000 90,000
Inventory 230,000 165,000
Prepaid expenses 25,000 23,000
Land 130,000 130,000
Building and equipment (net) 260,000 185,000
Total assets $874,000 $698,000

Liabilities and Stockholders Equity

Notes payable (short-term) $170,000 $120,000
Accounts payable 65,000 52,000
Accrued liabilities 40,000 40,000
Bonds payable, due 2023 250,000 170,000
Common stock, $10 par 200,000 200,000
Retained earnings 149,000 116,000
Total liabilities and stockholders equity $874,000 $698,000

Priscoll Company Income Statement For the Years Ended December 31

2020

2019

Sales revenue $882,000 $790,000
Cost of goods sold 640,000 575,000
Gross profit 242,000 215,000
Operating expenses 190,000 167,000
Net income $ 52,000 $ 48,000

Additional information:

1. Inventory at the beginning of 2019 was $115,000.
2. Accounts receivable (net) at the beginning of 2019 were $86,000.
3. Total assets at the beginning of 2019 were $660,000.
4. No common stock transactions occurred during 2019 or 2020.
5. All sales were on account.

Indicate, by using ratios, the change in liquidity and profitability of Priscoll Company from 2019 to 2020

2019

2020

LIQUIDITY

Current ratio :1 :1
Accounts receivable turnover times times
Inventory turnover times times

PROFITABILITY

Profit margin % %
Asset turnover times times
Return on assets % %
Earnings per share $ $

eTextbook and Media

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, 2020, and (2) as of December 31, 2021, after giving effect to the situation. (Round debt to assets ratio to 0 decimal places, e.g. 15% and other answers to 1 decimal place, e.g. 6.8 or 6.8%.)

Situation

Ratio

(1) 18,000 shares of common stock were sold at par on July 1, 2021. Net income for 2021 was $54,000. Return on common stockholders equity
(2) All of the notes payable were paid in 2021. All other liabilities remained at their December 31, 2020, levels. At December 31, 2021, total assets were $900,000. Debt to assets ratio
(3) The market price of common stock was $9 and $12 on December 31, 2020 and 2021, respectively. Net income for 2021 was $54,000. Price-earnings ratio

2020

2021

Return on common stockholders equity % %
Debt to assets ratio % %
Price-earnings ratio times times

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