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...
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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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