Homework Answers
Answer
| 2019 | 2020 | |
| Liquidity | ||
| Current ratio | 1.80 :1 | 1.76:1 |
| Account receivables turnover | 8.9 times | 9 times |
| Inventory turnover | 4.1 times | 3.24 times |
| Profitability | ||
| Profit margin | 6.0% | 5.8% |
| Assets turnover | 1.16 times | 1.12 times |
| Return on assets | 7.0% | 6.6% |
| Earnings per share | $2.4 | $2.6 |
1 current ratio = current assets / current liabilities
Current ratio in 2019 = 654,930 / 362,520 = 1.80 : 1
2020 current ratio = 827,640 / 470,250 = 1.76 : 1
2 Account receivables turnover = net credit sales / average account receivables
Average account receivables in 2019
= (147,060 + 153,900) / 2 = $150,480
Average account receivables in 2020
= (153,900 + 177,840) / 2 = $165,870
Account receivables turnover in 2019
= 1,350,900 / 150,480 = 8.9 times
Account receivables turnover in 2020
= 1,508,220 / 165,870 = 9.0 times
3 inventory turnover = cost of goods sold / average inventory
Average inventory in 2019
= (196,650 + 282,150) / 2 = $239,400
2020 average inventory
= (282,150 + 393,300) / 2 = $337,725
Inventory turnover in 2019
= 983,250 / 239,400 = 4.1 times
Inventory turnover in 2020
= 1,094,400 / 337,725 = 3.2 times
4 Profit margin = (net profit / sales) × 100
2019 profit margin = (82,080 / 1,350,900) × 100 = 6.0%
Profit margin in 2020 = (88,920 / 1,508,220) × 100 = 5.8%
5 Assets turnover = net sales / average total assets
Average total assets in 2019
= (1,128,600 + 1,193,580) / 2 = 1,161,090
Average total assets in 2020
= (1,193,580 + 1,494,540) / 2 = $1,344,060
2019 Assets turnover = 1,350,900 / 1,161,090 = 1.16times
Assets turnover in 2020
= 1,508,220 / 1,344,060 = 1.12 times
6 Return on assets
= (net income / average total assets) × 100
Return on assets in 2019
= (82,080 / 1,161,090) × 100 = 7.0%
Return on assets in 2020
= (88,920 / 1,344,060) × 100 = 6.6%
7 Earnings per share = income available to common share holders / weighted average number of common shares outstanding
Par value is $10
Weighted average number of common shares outstanding = 342,000 / 10 = 34,200 shares
Earnings per share in 2019 = 82,080 / 34,200 = $2.4
Earnings per share in 2020 = 88,920 / 34,200 = $2.6
The above are the detailed calculations of ratios in 2019 and 2020.
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check if the second answer correct The following financial information is for Priscoll Company. Priscoll Company...
check if the second answer correct
The following financial information is for Priscoll Company. Priscoll Company Balance Sheets December 31 Assets 2020 Cash $ 115,500 Debt investments (short-term) 90,750 Accounts receivable 171,600 Inventory 379,500 Prepaid expenses 41,250 Land 214,500 Building and equipment (net) 429,000 Total assets $1,442,100 Liabilities and Stockholders' Equity Notes payable (short-term) $280,500 Accounts payable 107,250 Accrued liabilities 66,000 Bonds payable, due 2023 412,500 Common stock, $10 par 330,000 Retained earnings 245,850 Total liabilities and stockholders' equity $1,442,100...
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The following financial information is for Priscoll Company.
The following financial information is for Priscoll Company. 2019 $ 71,500 44,000 99,000 181,500 25,300 Priscoll Company Balance Sheets December 31 Assets 2020 Cash $ 77,000 Debt investments (short-term) 60,500 Accounts receivable 114,400 Inventory 253,000 Prepaid expenses 27,500 Land 143,000 Building and equipment (net) 286,000 Total assets $961,400 Liabilities and Stockholders' Equity Notes payable (short-term) $187,000 Accounts payable 71,500 Accrued liabilities 44,000 Bonds payable, due 2023 275,000 Common stock, $10 par 220,000...
check if the second answer correct
The following financial information is for Priscoll Company. Priscoll Company Balance Sheets December 31 Assets 2020 Cash $ 115,500 Debt investments (short-term) 90,750 Accounts receivable 171,600 Inventory 379,500 Prepaid expenses 41,250 Land 214,500 Building and equipment (net) 429,000 Total assets $1,442,100 Liabilities and Stockholders' Equity Notes payable (short-term) $280,500 Accounts payable 107,250 Accrued liabilities 66,000 Bonds payable, due 2023 412,500 Common stock, $10 par 330,000 Retained earnings 245,850 Total liabilities and stockholders' equity $1,442,100...
The following financial information is for Priscoll Company. Priscoll Company Balance Sheets December 31 Assets 2020 Cash $ 84,700 Debt investments (short-term) 66,550 Accounts receivable 125,840 Inventory 278,300 Prepaid expenses 30,250 Land 157,300 Building and equipment (net) 314,600 Total assets $1,057,540 Liabilities and Stockholders' Equity Notes payable (short-term) $205,700 Accounts payable 78,650 Accrued liabilities 48,400 Bonds payable, due 2023 302,500 Common stock, $10 par 242,000 Retained earnings 180,290 Total liabilities and stockholders' equity $1,057,540 2019 $78,650 48,400 108,900 199,650 27,830...
Priscoll Company Balance Sheets December 31 Assets 2020 2019 $ 84,700 66,550 125,840 278,300 30,250 $ 78,650 48,400 108,900 199,650 27,830 157,300 223,850 $844,580 157.300 314,600 $1,057,540 Cash Debt investments (short-term) Accounts receivable Inventory Prepaid expenses Land Building and equipment (net) Total assets Liabilities and Stockholders' Equity Notes payable (short-term) Accounts payable Accrued liabilities Bonds payable, due 2023 Common stock, $10 par Retained earnings Total liabilities and stockholders' equity $205,700 78,650 48,400 302,500 242,000 180,290 $1,057,540 $145,200 62.920 48,400 205,700...
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