Question
The following financial information is for Sunland Company. SUNLAND COMPANY Balance Sheets December 31 Assets 2022 2021 Cash $69,000 $69,000 Debt investments (short-term) 53,000 41,000
The following financial information is for Sunland Company.
SUNLAND COMPANY
Balance Sheets
December 31
Assets
2022
2021
Cash
$69,000
$69,000
Debt investments (short-term)
53,000
41,000
Accounts receivable
103,000
92,000
Inventory
239,000
164,000
Prepaid expenses
25,000
29,000
Land
132,000
132,000
Building and equipment (net)
263,000
188,000
Total assets
$884,000
$715,000
Liabilities and Stockholders' Equity
Notes payable
$170,000
$101,000
Accounts payable
66,000
54,000
Accrued liabilities
42,000
42,000
Bonds payable, due 2025
251,000
170,000
Common stock, $10 par
205,000
205,000
Retained earnings
150,000
143,000
Total liabilities and stockholders' equity
$884,000
$715,000
SUNLAND COMPANY
Income Statements
For the Years Ended December 31
2022
2021
Sales revenue
$890,000
$791,000
Cost of goods sold
643,000
576,000
Gross profit
247,000
215,000
Operating expenses
190,000
160,000
Net income
$57,000
$55,000
Additional information:
1.Inventory at the beginning of 2021 was $115,000.2.Accounts receivable (net) at the beginning of 2021 were $90,000.3.Total assets at the beginning of 2021 were $631,000.4.No common stock transactions occurred during 2021 or 2022.5.All sales were on account.
(a1)
Compute the liquidity and profitability ratios of Sunland 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
enter the current ratio
:1enter the current ratio
:1enter percentages
%Accounts receivables turnover
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timesenter accounts receivables turnover in times
timesenter percentages
%Inventory turnover
enter inventory turnover in times
timesenter inventory turnover in times
timesenter percentages
%
2021
2022
% Change
PROFITABILITY
Profit margin
enter percentages
%enter percentages
%enter percentages
%Asset turnover
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timesenter asset turnover in times
timesenter percentages
%Return on assets
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%Earnings per share
$enter a dollar amount
$enter a dollar amount
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%
(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 e.g. 1% and if % change is a decrease show the numbers as negative, e.g. -1% or (1%).)
Situation
Ratio
1.
19,000shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $55,000.
Return on common stockholders' equity2.
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 $867,000.
Debt to assets ratio3.
The market price of common stock was $9and $13on December 31, 2022 and 2023, respectively.
Price-earnings ratio
2022
2023
% Change
Return on common stockholders' equity
enter percentages
%enter percentages
%enter percentages
%Debt to assets ratio
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%enter percentages
%enter percentages
%Price earnings ratio
enter a price earnings ratio in times
timesenter a price earnings ratio in times
timesenter percentages
%
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