Question

WILDHORSE COMPANY Balance Sheets December 31 Assets Cash Debt investments (short-term) Accounts receivable Inventory 2022 2021 $ 70,000 $68,000 51,000 40,000 109,000 91,000 231,000 167,000 27,000 26,000 134,000 134,000 264,000 186,000 $886,000 $712,000 Prepaid expenses Land Building and equipment (net) Total assets Liabilities and Stockholders' Equity Notes payable $171,000 $109,000 Accounts payable 67,000 53,000 Accrued liabilities 41,000 41,000 Bonds payable, due 2025 250,000 170,000 Common stock, $10 par 206,000 151,000 206,000 133,000 Retained earnings Total liabilities and stockholders' equity $886,000 $712,000

Answer 1

	2021		2022		% Change
LIQUIDITY
Current Ratio	1.93	:1	1.75	:1	-9%
Accounts Receivable turnover	8.8	times	9.0	times	2%
Inventory turnover	4.0	times	3.3	times	-19%
	2021		2022		% Change
PROFITABILITY
Profit margin	6.9	%	6.3	%	-8%
Asset turnover	1.19	times	1.13	times	-5%
Return on assets	8.2	%	7.1	%
Earnings per share	$2.67		$2.77		4%

Working notes:

Current Assets:	2021	2022
Cash	$68,000	$70,000
Short-term Investments	$40,000	$51,000
Accounts Receivable	$91,000	$109,000
Inventory	$167,000	$231,000
Prepaid Expenses	$26,000	$27,000
Total Current Assets (a)	$392,000	$488,000
Current Liabilities:
Notes Payable	$109,000	$171,000
Accounts Payable	$53,000	$67,000
Accrued Liabilities	$41,000	$41,000
Total Current Liabilities (b)	$203,000	$279,000
Current Ratio (a/b)	1.93	1.75
Net Credit sales (a)	$798,000	$899,000
Average Accounts Receivable [($90,000+$91,000)/2]; [($91,000+$109,000)/2] (b)	$90,500	$100,000
Accounts Receivable Turnover (a/b)	8.8	9.0
Cost of Goods Sold (a)	$575,000	$650,000
Average Inventory [($117,000+$167,000)/2]; [($167,000+$231,000)/2]	$142,000	$199,000
Inventory turnover ratio (a/b)	4.0	3.3
Net Income (a)	$55,000	$57,000
Net Sales (b)	$798,000	$899,000
Ner profit margin (a/b)	6.9%	6.3%
Net Sales (a)	$798,000	$899,000
Average total assets (b) [($634,000+$712,000)/2];[($712,000+$886,000)/2]	$673,000	$799,000
Assets turnover (a/b)	1.19	1.13
Net Income (a)	$55,000	$57,000
Average total assets (b) [($634,000+$712,000)/2];[($712,000+$886,000)/2]	$673,000	$799,000
Return on assets (a/b)	8.2%	7.1%
Net Income	$55,000	$57,000
Less: Preferred Dividends	$0	$0
Earnings available to common stockholders (a)	$55,000	$57,000
Weighted average number of common shares (b) ($206,000/$10 per share)	20,600	20,600
Earnings per share (a/b)	$2.67	$2.77