The following financial information is for Sheridan Company. SHERIDAN COMPANY Balance Sheets December 31 Assets 2022 2021 $ 71,000 55,000 103,000 229,000 29,000 132,000 259,000 $878,000 $ 66,000 40,000 90,000 169,000 28,000 132,000 184,000 $709,000 Cash Debt investments (short-term) Accounts receivable Inventory Prepaid expenses Land Building and equipment (net) Total assets Liabilities and Stockholders' Equity Notes payable Accounts payable Accrued liabilities Bonds payable, due 2025 Common stock, $10 par Retained earnings Total liabilities and stockholders' equity $169,000 65,000 41,000 251,000 200,000 152,000 $878,000 $102,000 53,000 41,000 170,000 200,000 143,000 $709,000 SHERIDAN COMPANY Income Statements For the Years Ended December 31 2022 2021 Sales revenue Cost of goods sold Gross profit Operating expenses Net income $880,000 645,000 235,000 184,000 $ 51,000 $784,000 574,000 210,000 160,000 $ 50,000 Additional information: 1. 2. 3. Inventory at the beginning of 2021 was $115,000. Accounts receivable (net) at the beginning of 2021 were $88,000. Total assets at the beginning of 2021 were $638,000. No common stock transactions occurred during 2021 or 2022. All sales were on account. 4. 5. (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 0 decimal places, e.g. 15 and round all other answers to 1 decimal place, e.g. 15.5. Round % change to 0 decimal places, for eg. 1% and if % change is a decrease show the numbers as negative, e.g. -1% or (1%).) Situation Ratio 1. Return on common stockholders' equity Debt to assets ratio 2. 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 $856,000. The market price of common stock was $9 and $12 on December 31, 2022 and 2023, respectively. 3. Price-earnings ratio 2022 2023 % Change 14.68 % 10.88 % -25.89 % Return on common stockholders' equity Debt to assets ratio Price earnings ratio 59.91 % 41.71 % -30.38 % 3.53 times 4.71 times 2 %