Question

CES Practice Do It! Review 01 The condensed financial statements of Cullumber Company for the years 2019 and 2020 are presented as follows. (An A CULLUMBER COMPANY Balance Sheets December 31 2020 2019 $360 600 590 Current assets Cash and cash equivalents Accounts receivable (net) Inventory Prepaid expenses Total current assets Investments Property, plant, and equipment Intangibles and other assets $330 670 660 120 1,780 210 420 530 160 1,710 210 380 510 $2,810 $2,940 Total assets Current liabilities Long-term liabilities Stockholders' equity-common Total liabilities and stockholders' equity $1,100 610 1,230 $2,940 $990 580 1,240 $2,810 CULLUMBER COMPANY

Answer 1

Ans. A	Current ratio   =   Total current assets / Total current liabilities
	2020	$1,780 / $1,100	1.62 : 1
	2019	$1,710 / $990	1.73 : 1
Ans. B	Inventory turnover = Cost of goods sold / Average Inventory
	2020	$1,155 / $625	1.85	times
	2019	$1,090 / $490	2.22	times
	*Average inventory = (Beginning inventory + Ending inventory) / 2
	2020	($590 + $660) / 2	$625
	2019	($390 + $590) / 2	$490
Ans. C	Profit Margin =   Net income / Sales * 100
	2020	$294 / $4,000 * 100	7.4%
	2019	$154 / $3,660 * 100	4.2%
Ans. D	Return on assets =   Net income / Average assets * 100
	2020	$294 / $2,875 * 100	10.2%
	2019	$154 / $2,440 * 100	6.3%
	*Average inventory = (Beginning inventory + Ending inventory) / 2
	2020	($2,810 + $2,940) / 2	$2,875
	2019	($2,070 + $2,810) / 2	$2,440