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In: Accounting

The comparative statements of Oriole Company are presented here. ORIOLE COMPANY Income Statements For the Years...

The comparative statements of Oriole Company are presented here.

ORIOLE COMPANY
Income Statements
For the Years Ended December 31

2022

2021

Net sales

$2,067,400

$1,925,000

Cost of goods sold

1,147,000

1,126,720

Gross profit

920,400

798,280

Selling and administrative expenses

560,000

536,480

Income from operations

360,400

261,800

Other expenses and losses

   Interest expense

24,640

22,400

Income before income taxes

335,760

239,400

Income tax expense

100,728

71,820

Net income

$ 235,032

$ 167,580

ORIOLE COMPANY
Balance Sheets
December 31

Assets

2022

2021

Current assets

   Cash

$ 67,312

$ 71,904

   Debt investments (short-term)

82,880

56,000

   Accounts receivable

131,936

115,136

   Inventory

141,120

129,360

     Total current assets

423,248

372,400

Plant assets (net)

726,880

582,736

Total assets

$1,150,128

$955,136

Liabilities and Stockholders’ Equity

Current liabilities

   Accounts payable

$ 179,200

$162,848

   Income taxes payable

48,720

47,040

     Total current liabilities

227,920

209,888

Bonds payable

246,400

224,000

     Total liabilities

474,320

433,888

Stockholders’ equity

   Common stock ($5 par)

324,800

336,000

   Retained earnings

351,008

185,248

     Total stockholders’ equity

675,808

521,248

Total liabilities and stockholders’ equity

$1,150,128

$955,136


All sales were on account. Net cash provided by operating activities for 2022 was $246,400. Capital expenditures were $152,320, and cash dividends were $69,272.

Compute the following ratios for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)

(a) Earnings per share

$enter earnings per share in dollars

(b) Return on common stockholders’ equity

enter return on common stockholders’ equity in percentages

%
(c) Return on assets

enter return on assets in percentages

%
(d) Current ratio

enter current ratio

:1
(e) Accounts receivable turnover

enter accounts receivable turnover in times

times
(f) Average collection period

enter average collection period in days

days
(g) Inventory turnover

enter inventory turnover in times

times
(h) Days in inventory

enter days in inventory

days
(i) Times interest earned

enter times interest earned

times
(j) Asset turnover

enter asset turnover in times

times
(k) Debt to assets ratio

enter debt to assets ratio in percentages

%
(l) Free cash flow

$enter free cash flow in dollars

Solutions

Expert Solution

a)

Earnings per share = Net income / Common stock outstanding

$235,032 / 66,080

$3.56

per share

Average common stock = (Beginning common stock + Ending common stock) / 2

($336,000 + $324,800) / 2

$330,400

Common stock outstanding =   Average Common stock / Par value

$300,400 / $5   =   66,080

b)

Return on Common stockholder's equity =   Net income / Average Common stockholder's equity * 100

$235,032 / $598,528 * 100

39.27%

Average Stockholder's equity =   (Beginning equity + Ending equity) / 2

($521,248 + $675,808) / 2

$598,528

c)

Return on assets =   Net income / Average assets * 100

$235,032 / $1,052,632 * 100

22.33%

Average assets = (Beginning assets + Ending assets) / 2

($955,136 + $1,150,128) / 2

$1,052,632

d)

Current ratio   =   Total current assets / Total current liabilities

$423,248 / $227,920

1.86 to 1

e)

Accounts receivable turnover = Net credit sales / Average receivables

$2,067,400 / $123,536

16.74 times

Average receivable = (Beginning receivables + Ending receivables) / 2

($115,136 + $131,936) / 2

$123,536

f)

Number of days sales in receivable = No. of days in year / Accounts receivables turnover ratio

365 / 16.74

21.80 days

g)

Inventory turnover = Cost of goods sold / Average Inventory

$1,147,000 / $135,240

8.48   times

Average inventory = (Beginning inventory + Ending inventory) / 2

($129,360 + $141,120) / 2

$135,240

h)

Days in inventory = No. of days in year / Inventory turnover ratio

365 / 8.48

43.04 days

i)

Time interest earned = Income from operations / Interest expenses

$360,400 / $24,640

14.63

times

j)

Total assets turnover = Sales / Average operating assets

$2,067,400 / $1,052,632

1.96

times

k)

Debt to assets ratio =   Total liabilities / Total assets * 100

$474,320 / $1,150,128 * 100

41.24%

l)

Free cash flow =   Net cash provided by operating activities - Capital expenditures - Dividends

$246,400 - $152,320 - $69,272

$24,808


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