Question

The following financial information is for Cullumber Company.

Problem 13-04A The following financial information is for Cullumber Company. CULLUMBER COMPANY Balance Sheets December 31 Assets 2022 Cash $ 72,000 Debt investments (short-term) 51,000 Accounts receivable 109,000 Inventory 237,000 Prepaid expenses 28,000 Land 131,000 Building and equipment (net) 259,000 Total assets $887,000 Liabilities and Stockholders' Equity Notes payable $169,000 Accounts payable 69,000 Accrued liabilities 41,000 Bonds payable, due 2025 252,000 Common stock, $10 par 209,000 Retained earnings 147,000 Total liabilities and stockholders' equity $887,000 2021 $ 68,000 42,000 92,000 169,000 25,000 131,000 186,000 $713,000 $109,000 50,000 41,000 170,000 209,000 134,000 $713,000 CULLUMBER COMPANY Income Statements For the Years Ended December 31 2022 2021 Sales revenue $899,000 $789,000 Cost of goods sold 646,000 576,000 Gross profit 253,000 213,000 Operating expenses 192,000 159,000 Net income $ 61,000 $54,000 Additional information: 1. Inventory at the beginning of 2021 was $117,000. 2. Accounts receivable (net) at the beginning of 2021 were $90,000. 3. Total assets at the beginning of 2021 were $634,000. 4. No common stock transactions occurred during 2021 or 2022. 5. All sales were on account.

Answer 1

2021 2022 68,000.00 72,000.00 42,000.00 51,000.00 92,000.00 109,000.00 169,000.00 237,000.00 25,000.00 28,000.00 396,000.00 497,000.00 Current Asset Particulars Cash Short tem Investment Accounts Receivable Inventory Prepaid Expense Total Current Liability Particulars Notes Payable Accounts Payable Accrued Liability Total Answer As follows A Liquidity Ratios 2021 2022 109,000.00 169,000.00 50,000.00 69,000.00 41,000.00 41,000.00 200,000.00 279,000.00 Answer 1 Current Ratio = Year Current Asset (a) Current Liability (b) Current Ratio (c = a/b) (Times) Current Asset/Current Liability 2021 2022 396,000.00 497,000.00 200,000.00 279,000.00 Times of Change 1.98 1.78 -0.20 % Change -10%

Answer 2 Accounts Receivable Turnover Ratio - Credit sales / Average account receivable 2022 Year 2020 2021 Account Receivable 90,000.00 92,000.00 109,000.00 Average Account receivable For 2021 (a) 92,000+ 90,000/2 137,000.00 Average Account receivable For 2022 (b) 92,000 + 109,000/2 155,000.00 Credit Sales (c) 789,000.00 899,000.00 Accounts Receivable Turnover Ratio (d = c/ a or b)(Times) Times Times of Change % Change 0.041% 5.76 5.80 Answer 3 Inventory Turnover = Cost of Good sold / Average Inventory Year 2020 117000 2021 169000 2022 237000 Inventory Average Inventory for 2021 (a) Average Inventory for 2022 (b) 169,000+117000/2 227,500.00 237,000+169,000/2 321,500.00 576,000.00 646,000.00 Times of Change % Change 2.53 2.01 -0.52tiva21% Cost of Good Sold (c) Inventory Turnover (d=c/ a or b) (Times)

Profitability Year Sales Cost of Good sold Gross Profit Operating Expense Net Income Common Stock Value Per share Number shares Answer 1 Profit Margin or Gross Profit Ratio = 2021 789,000.00 576,000.00 213,000.00 159,000.00 54,000.00 209,000.00 10.00 20900 Gross Profit / Sales 2022 899,000.00 646,000.00 253,000.00 192,000.00 61,000.00 209,000.00 10.00 20900 % Change Profit Margin or Gross Profit Ratio (c/a) 27% 28% 1% Answer 2 Asset Turnover = Sales or Cost of good sold /Average total Asset Year Assets Average Total asset for 2021 (a) 2020 2021 2022 634,000.00 713,000.00 887,000.00 713,000 +634,000/2 1,030,000.00 887,000+713000/2 1,243,500.00 576,000.00 646,000.00 Times of Change % Change 0.56 0.52 -0.04 -7% Average Total asset for 2022 (b) Cost of Good Sold (c) Asset Turnover = (c/ a or b) (Times)

Answer 3 Return On asset = Net Profit After Tax / Average Total Asset Year Assets Average Total asset for 2021 (a) 20201 2021 2022 634,000.00 713,000.00 887,000.00 713,000 +634,000/2 1,030,000.00 887,000+713000/2 1,243,500.00 54,000.00 61000 Times of Change % Change 0.05 0.05 -0.00 -6% Average Total asset for 2022 (b) Net Income or Net Profit (e) Return on Asset (Times) Answer 4 Earning per Share Year 20211 2022 Net Income (e) Number Of Shares (h) Earning Per share (e/h) (Times) 54,000.00 20900 2.58 61,000.00 20900 Times of Change % Change 2.92 0.33 13%

Answer 1 Return On Common Stockholders Equity = Net Income / Equity share holders Fund Year 2021 2022 2023 Net Income 54000 61,000.00 55000 Equity Fund Common Stock 209000 109000* Retained Earnings 134000 147000 147000 ** Total Equity Fund 356000 256000 Times of Change % Change Return On Common Stockholders Equity (a/e)(Times) 0.1713483 0.21484 0.04 25% 20000 * Common Stock sold Shares Sold on July 1st 2023 Used Shares (Month) Wighted average Number of shares Par Value Value of Shares Sold ** Retained Earnings Assumed to be $ 147,000 10000 100000

Total Outside Liability / Total Asset 2021 2022 2023 252000 Answer 2 Debt to Asset Ratio = Year Asper Question Total Outside Liability Bond Notes Payable Account payable Accrued Liability Total Outside Liability (a) Asper Question Total Asset (b) 170000 109000 50000 41000 3700000 252000 169000 69000 41000 531000 69000 41000 362000 887000 877000 Times of Change % Change 0.41 -0.19 -31% Debt to Asset Ratio =(a/b) (Times) 0.60 Answer 3 Price Earning Ratio Year Market Price Per Share / Earning price per Share 2021 2022 2023 61000 Net Income Market Price Per Share for Common stock * shares Sold on July 1st (6 Month Used) Weighted average Number of shares ** Price Earning Ratio (Times) 55000 12 20000 10000 Times of Change % Change 5.5 2.58 88% 20900 20900 2.92 * Asper Question ** (20000 shares (sold July 1at 2023 )multiplied with 6 month /12 month)