Question

Problem 13-031 Condensed balance sheet and income statement data for Sheffield Corporation are presented here. ENT ES ignment2 m 13-04A m 13-03 em 13-02A d Your Critical 13-04 ad Your Critical ng 13-03 Exercise 13-01 Exercise 13-02 Exercise 13-04 Exercise 13-05 Exercise 13-06 Exercise 13-02 Exercise 13-08 Level ission) SHEFFIELD CORPORATION Balance Sheets December 31 2022 2021 Cash $ 32,000 $ 22,000 Accounts receivable (net) 52,000 47,000 Other current assets 94,000 99,000 Investments 59,000 74,000 Plant and equipment (net) 500,000 370,000 $737,000 $612,000 Current liabilities $ 87,000 $82,000 Long-term debt 149,000 89,000 Common stock, $10 par 324,000 314,000 Retained earnings 177,000 127,000 $737,000 $612,000 2020 $ 20,000 50,000 68,000 49,000 358,000 $545,000 $ 72,000 54,000 304,000 115,000 $545,000 Score Results by bjective SHEFFIELD CORPORATION Income Statements For the Years Ended December 31 2022 Sales revenue $744,000 42.000 Less: Sales returns and allowances Net sales 702,000 Cost of goods sold 429,000 Gross profit 273,000 Operating expenses (including income taxes) 182,000 Net income $ 91,000 2021 $604,000 32,000 572,000 354,000 218,000 152,000 $ 66,000 Additional information:

Answer 1

First 4 parts are being answered here.

(a) Profit margin = Net income / Sales * 100

For 2021:

Net income = $66000, Sales = $604000

Net Profit margin = $66000 / $604000 * 100 = 10.9%

For 2022:

Net income = $91000, Sales = $744000

Net Profit margin = $91000 / $744000 * 100 = 12.2%

(b) Gross Profit rate = Net sales - Cost of goods sold / Sales * 100

For 2021:

Gross Profit rate = ($572000 - $354000) / $572000 * 100

Gross Profit rate = $218000 / $572000 * 100 = 38.1%

For 2022:

Gross Profit rate = ($702000 - $273000) / $702000 * 100

Gross Profit rate = $429000 / $702000 * 100 = 61.1%

(c) Total assets turnover ratio = Net Sales / Average total assets * 100

where, Average total assets = Beginning assets + Ending assets / 2

For 2021:

Beginning assets = Assets in 2020 = $545000, Ending assets = $612000

So, Average assets = ($545000 + $612000) / 2 = $1157000 / 2 = $578500

Net sales = $572000

Now, putting these values in the above formula, we get,

Total assets turnover ratio = $572000 / $578500 = 0.99 times

For 2022:

Beginning assets = Assets in 2021 = $612000, Ending assets = $737000

So, Average assets = ($612000 + $737000) / 2 = $1349000 / 2 = $674500

Net sales = $702000

Now, putting these values in the above formula, we get,

Total assets turnover ratio = $702000 / $674500 = 1.04 times

(d) Earnings per share (EPS) = Net income / Average Common stock outstanding

where, Average common stock outstanding = Beginning common stock + Ending common stock / 2

For 2021:

Beginning common stock = Common stock for 2020 = $304000, Ending common stock = $314000

Average common stock = ($304000 + $314000) / 2 = $618000 / 2 = $309000

Now, putting the values in the earnings per share formula, we get,

Earnings per share = $66000 / $309000 = 0.21

For 2022:

Beginning common stock = Common stock for 2021 = $314000, Ending common stock = $324000

Average common stock = ($314000 + $324000) / 2 = $638000 / 2 = $319000

Now, putting the values in the earnings per share formula, we get,

Earnings per share = $91000 / $319000 = 0.29