Question

The comparative statements of Cullumber Company are presented here.

CULLUMBER COMPANY Income Statements For the Years Ended December 31
		2022		2021
Net sales		$1,894,200		$1,755,700
Cost of goods sold		1,063,575		1,011,200
Gross profit		830,625		744,500
Selling and administrative expenses		505,200		484,200
Income from operations		325,425		260,300
Other expenses and losses
Interest expense		23,500		21,500
Income before income taxes		301,925		238,800
Income tax expense		93,065		74,500
Net income		$ 208,860		$ 164,300

CULLUMBER COMPANY Balance Sheets December 31
Assets		2022		2021
Current assets
Cash		$ 60,166		$ 64,200
Debt investments (short-term)		74,000		50,000
Accounts receivable		123,000		108,000
Inventory		127,500		117,000
Total current assets		384,666		339,200
Plant assets (net)		661,000		532,300
Total assets		$1,045,666		$871,500
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$ 165,200		$150,600
Income taxes payable		45,000		43,500
Total current liabilities		210,200		194,100
Bonds payable		232,000		212,000
Total liabilities		442,200		406,100
Stockholders’ equity
Common stock ($5 par)		290,000		300,000
Retained earnings		313,466		165,400
Total stockholders’ equity		603,466		465,400
Total liabilities and stockholders’ equity		$1,045,666		$871,500

All sales were on account. Net cash provided by operating activities for 2022 was $242,580. Capital expenditures were $137,000, and cash dividends were $60,794.

Compute the following ratios for 2022. (Round current ratio, earnings per share and asset turnover to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 2.5%. Use 365 days in calculation.)

(a)		Earnings per share		$enter earnings per share in dollars rounded to 2 decimal places
(b)		Return on common stockholders’ equity		enter Return on common stockholders’ equity in percentages rounded to 1 decimal place	%
(c)		Return on assets		enter Return on assets in percentages rounded to 1 decimal place	%
(d)		Current ratio		enter Current ratio rounded to 2 decimal places	:1
(e)		Accounts receivable turnover		enter a number of Accounts receivable turnover in times rounded to 1 decimal place	times
(f)		Average collection period		enter a number of Average collection period in days rounded to 1 decimal place	days
(g)		Inventory turnover		enter a number of Inventory turnover in times rounded to 1 decimal place	times
(h)		Days in inventory		enter a number of days in inventory rounded to 1 decimal place	days
(i)		Times interest earned		enter a number of times interest earned rounded to 1 decimal place	times
(j)		Asset turnover		enter a number of Asset turnover in times rounded to 2 decimal places	times
(k)		Debt to assets ratio		enter Debt to assets ratio in percentages rounded to 1 decimal place	%
(l)		Free cash flow		$enter Free cash flow in dollars

Answer 1

RATIOS	FORMULA	COMPUTATION
a. Earning per Share	(Net Income/No.of shares Outstanding)	No.of shares outstanding = 290,000/5 = 58,000 shares EPS = $208,860/58,000 = 3.60
b. Return on Common Stockholders Equity	(Net Income/Total Stakeholders Equity) × 100	= ($208,860/$603,466) × 100 = 34.61%
c. Return on Assets	(Net Income/Total Assets)	= ($208,860/$1,045,666) = 0.2
d. Current Ratio	(Current Assets/Current Liabilities)	= $384,666/$210,200 = 1.83

answered by: anonymous