Question

The following financial information is for Crane Company.

CRANE COMPANY Balance Sheets December 31
Assets		2022		2021
Cash		$ 71,000		$ 69,000
Debt investments (short-term)		50,000		41,000
Accounts receivable		107,000		92,000
Inventory		234,000		162,000
Prepaid expenses		29,000		23,000
Land		135,000		135,000
Building and equipment (net)		261,000		187,000
Total assets		$887,000		$709,000
Liabilities and Stockholders’ Equity
Notes payable		$169,000		$106,000
Accounts payable		66,000		54,000
Accrued liabilities		42,000		42,000
Bonds payable, due 2025		250,000		171,000
Common stock, $10 par		203,000		203,000
Retained earnings		157,000		133,000
Total liabilities and stockholders’ equity		$887,000		$709,000

CRANE COMPANY Income Statements For the Years Ended December 31
		2022		2021
Sales revenue		$902,000		$792,000
Cost of goods sold		647,000		576,000
Gross profit		255,000		216,000
Operating expenses		195,000		160,000
Net income		$ 60,000		$ 56,000

Additional information:

1.		Inventory at the beginning of 2021 was $116,000.
2.		Accounts receivable (net) at the beginning of 2021 were $88,000.
3.		Total assets at the beginning of 2021 were $642,000.
4.		No common stock transactions occurred during 2021 or 2022.
5.		All sales were on account.

(a1)

Compute the liquidity and profitability ratios of Crane 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	:1		enter the current ratio	:1		enter percentages	%
Accounts receivables turnover		enter accounts receivables turnover in times	times		enter accounts receivables turnover in times	times		enter percentages	%
Inventory turnover		enter inventory turnover in times	times		enter inventory turnover in times	times		enter percentages	%

		2021			2022			% Change
PROFITABILITY
Profit margin		enter percentages	%		enter percentages	%		enter percentages	%
Asset turnover			times			times		e	%
Return on assets		enter percentages	%		enter percentages	%		enter percentages	%
Earnings per share		$enter a dollar amount			$enter a dollar amount			enter percentages	%

(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.		20,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $55,000.		Return on common stockholders’ equity
2.		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 $868,000.		Debt to assets ratio
3.		The market price of common stock was $9 and $12 on 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			%			%			%
Price earnings ratio			times			times			%

Answer 1

LIQUIDITY Ratio Current 71000 + 50000 tlo 7000 + 234000 + 29000 109000 + 66000+ 42000 2022 of one 387000 20 2000 y 1.9 1 change 1590 Accounts Receivable Turnover Retios Net Credit sela Th Arg. Alc Recen 2011 - $792000 & & ffdby och 8.8 times 2022 ) $9.2000 99500 a) a times 90000 of change of m 2 ) Inventory Turnover of i 2 576000 Cost of Aug. & Goods seld Inventory qol times 2021 of 4.lt 139000 647000 a 2 3.3 2022 times time g 3.3 198000 to chape - 24010

Porfel Mage Net et Inconle Income Net soles 2021 & $56000 & 740 $792000 2022 $60000 och 6.1. $9.2owo د عمله .2 ( ها ی Assel Turnover Retid Mel Sales Arg. Total Assels 2021 $ 792000 1.2 times 8675500 2022 $90 2000 tel. I times 4798000 - ала из ку) Return on Net Aug. Income co Total Assels 2021 y Assets - & Son & 675000 $60000 $79800 ) 800 2022 & To of change 412.5%)

BARNING FOR SHARR Met Income No. of share ols 2021 $ 50000 20300 - ) 2.8 2022 Я от of Change I 7 lo