Vaughn Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Vaughn and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,960 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $6,030 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Vaughn's cash flow problems are due primarily to the company's desire to finance a $299,210 plant expansion over the next 2 fiscal years through internally generated funds. The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years. Vaughn Corporation Balance Sheet March 31 Assets Cash Notes receivable Accounts receivable (net) Inventories (at cost) Plant & equipment (net of depreciation) Total assets 2021 $18,280 147,800 131,830 103,960 1,441,730 $1,843,600 2020 $12,630 132,850 124,830 50,250 1,408,680 $1,729,240 Liabilities and Owners' Equity Accounts payable Notes payable Accrued liabilities Common stock (130,000 shares, $10 par) Retained earningsa Total liabilities and stockholders' equity $78,440 75,950 11,730 1,312,780 364,700 $1,843,600 $91,050 62,110 6,630 1,304,780 264,670 $ 1,729,240 aCash dividends were paid at the rate of $1 per share in fiscal year 2020 and $2 per share in fiscal year 2021. Sales revenue Cost of goods solda Gross margin Operating expenses Income before income taxes Income taxes (40%) Net income Vaughn Corporation Income Statement For the Fiscal Years Ended March 31 2021 $3,014,860 1,543,140 1,471,720 861,510 610,210 244,084 $366,126 2020 $2,692,590 1,437,230 1,255,360 774,820 480,540 192,216 $288,324 Depreciation charges on the plant and equipment of $100,890 and $103,120 for fiscal years ended March 31, 2020 and 2021, respectively, are included in cost of goods sold. (a) Compute the following items for Vaughn Corporation. (Round answers to 2 decimal places, e.g. 2.25 or 2.25%.) 1. 2. 3. 4. 5. Current ratio for fiscal years 2020 and 2021. Acid-test (quick) ratio for fiscal years 2020 and 2021. Inventory turnover for fiscal year 2021. Return on assets for fiscal years 2020 and 2021. (Assume total assets were $1,677,350 at 3/31/19.) Percentage change in sales, cost of goods sold, gross margin, and net income after taxes from fiscal year 2020 to 2021. 2020 2021 1. Current ratio :1 2. Acid-test (quick) ratio 3. Inventory turnover times 4. Return on assets 5. Percent Changes Percent Increase Sales revenue Cost of goods sold Gross margin Net income after taxes
