Question

The comparative statements of Pharoah Company are presented here.

PHAROAH COMPANY Income Statements For the Years Ended December 31
		2022		2021
Net sales		$1,697,400		$1,575,000
Cost of goods sold		947,000		905,400
Gross profit		750,400		669,600
Selling and administrative expenses		450,000		431,100
Income from operations		300,400		238,500
Other expenses and losses
Interest expense		19,800		18,000
Income before income taxes		280,600		220,500
Income tax expense		84,180		66,150
Net income		$ 196,420		$ 154,350

PHAROAH COMPANY Balance Sheets December 31
Assets		2022		2021
Current assets
Cash		$ 54,090		$ 57,780
Debt investments (short-term)		66,600		45,000
Accounts receivable		106,020		92,520
Inventory		113,400		103,950
Total current assets		340,110		299,250
Plant assets (net)		584,100		468,270
Total assets		$924,210		$767,520
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$ 144,000		$130,860
Income taxes payable		39,150		37,800
Total current liabilities		183,150		168,660
Bonds payable		198,000		180,000
Total liabilities		381,150		348,660
Stockholders’ equity
Common stock ($5 par)		261,000		270,000
Retained earnings		282,060		148,860
Total stockholders’ equity		543,060		418,860
Total liabilities and stockholders’ equity		$924,210		$767,520

All sales were on account. Net cash provided by operating activities for 2022 was $198,000. Capital expenditures were $122,400, and cash dividends were $63,220.

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

Answer 1

	Ratios	Formula	Working	Ratios				2022	2021
a	Earning per share	Net income/Avg share O/S	$196,420/{(52,200+54,000)/2}	3.70			Common share value	$ 261,000.00	$ 270,000.00
							Outstanding shares@5	52,200.00	54,000.00
							Avg Outstanding shares	53,100.00
b	Return on Equity	Net income/avg shareholder's equity	$196,420/{(543,060+418,860)/2}	40.84%			Total stockholders’ equity	$ 543,060.00	$ 418,860.00
							Avg shareholder's equity	$ 480,960.00
c	Return on Total assets	Net income/avg Total assets	$196,420/{(924,210+767,520)/2}	23.22%			Total assets	$ 924,210.00	$ 767,520.00
							Avg total asset	$ 845,865.00
d	Current Ratio	Current asset/current liabilities	($340,110/$183,150)	1.86	:1
e	Account Receivable turnover	Net sales revenue/Avg Account Receivable	$16,97,400/{(106,020+92,520)/2}	17.10	times		Accounts receivable	$ 106,020.00	$    92,520.00
							Avg Accounts receivable	$    99,270.00
f	Avg collection period	365/Accounts Receivable turnover	(365/17.1)	21.35	Days
g	Inventory turnover	COGS/Avg inventory	947000/{(113,400+103,950)/2}	8.71	times		Inventory	$ 113,400.00	$ 103,950.00
							Avg Inventory	$ 108,675.00
h	Days sales in inventory	365/inventory turnover	(365/8.71)	41.89	Days
i	Times interest earned	Operating income(EBIT)/interest expense	($300,400/$19,800)	15.17	times
j	Asset turnover ratio	Net sales/avg Total asset	$16,97,400/{(924,210+767,520)/2}	2.01	times
k	Debt assets	Total debt/Total asset	($381,150/$924,210)	41.24%
l	Free Cash flow	Cash from operation- capital expenditure	($198,000-$122,400)	$ 75,600.00
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