Question

Presented below is information related to Pina Inc. $111,000 14,800 Cash Receivables Less: Allowance Inventory Prepaid insurance Land Equipment (net) PINA INC. BALANCE SHEET DECEMBER 31, 2020 $45,100 Notes payable (short-term) Accounts payable 96,200 Accrued liabilities 169,300 Common stock (par $5) 8,100 Retained earnings 19,900 150,500 $489,100 $50,300 31,700 5,100 259,100 142,900 $489,100 $1,401,400 PINA INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020 Sales revenue Cost of goods sold Inventory, Jan. 1, 2020 $ 201,900 Purchases 797,500 Cost of goods available for sale 999,400 Inventory, Dec. 31, 2020 (169,300) Cost of goods sold Gross profit on sales Operating expenses Net income 830,100 571,300 171,100 $400,200

Answer 1

1) Current Ratio:
Cash	$45,100
Receivables	$96,200
Inventory	$169,300
Prepaid Insurance	$8,100
Total Current Assets (a)	$318,700
Notes payable (short-term)	$50,300
Accounts Payable	$31,700
Accrued liabilities	$5,100
Total Current Liabilities (b)	$87,100
Current Ratio (a/b)	3.66	times
2) Inventory turnover:
Cost of Goods Sold (a)	$830,100
Average Inventory [($201,900 + $169,300)/2] (b)	$185,600
Inventory turnover (a/b)	4.47	times
3) Accounts receivable turnover:
Net credit sales (a)	$1,401,400
Ending Receivables (b)	$96,200
Accounts receivable turnover (a/b)	14.57	times
4) Earnings per share:
Net Income	$400,200
Less: Preferred dividends	$0
Earnings available to the common shareholders (a)	$400,200
Weighted average number of common shares (b) ($259,100/$5)	51,820
Earnings per share (a/b)	$7.72
5) Profit margin ratio:
Net Income (a)	$400,200
Net credit sales (b)	$1,401,400
Profit margin ratio (a/b*100)	28.56%
6) Return on assets on December 31, 2020:
Net Income (a)	$400,200
Total assets (b)	$489,100
Return on assets (a/b*100)	81.82%

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