Question
In: Accounting
Comparative financial statements for Oriole and Cheyenne Ltd. are shown below. ORIOLE AND CHEYENNE LTD. Income...
Comparative financial statements for Oriole and Cheyenne Ltd. are shown below.
| ORIOLE AND CHEYENNE LTD. Income Statement Year Ended December 31 |
||||||
| 2021 | 2020 | |||||
| Net sales | $900,000 | $840,000 | ||||
| Cost of goods sold | 625,000 | 575,000 | ||||
| Gross profit | 275,000 | 265,000 | ||||
| Operating expenses | 154,000 | 150,000 | ||||
| Profit from operations | 121,000 | 115,000 | ||||
| Other revenues and expenses | ||||||
| Interest expense | 30,000 | 20,000 | ||||
| Profit before income tax | 91,000 | 95,000 | ||||
| Income tax expense | 27,000 | 20,000 | ||||
| Profit | $64,000 | $75,000 | ||||
| ORIOLE AND CHEYENNE LTD. Balance Sheet December 31 |
||||||
| Assets | 2021 | 2020 | 2019 | |||
| Cash | $94,000 | $84,000 | $10,000 | |||
| Accounts receivable | 112,000 | 112,000 | 110,000 | |||
| Inventories | 140,000 | 135,000 | 96,000 | |||
| Prepaid expenses | 25,000 | 23,000 | 114,000 | |||
| Land, buildings, and equipment | 390,000 | 305,000 | 300,000 | |||
| Total assets | $761,000 | $659,000 | $630,000 | |||
| Liabilities and Shareholders’ Equity | ||||||
| Liabilities | ||||||
| Notes payable | $110,000 | $100,000 | $100,000 | |||
| Accounts payable | 43,000 | 40,000 | 50,000 | |||
| Accrued liabilities | 32,000 | 40,000 | 30,000 | |||
| Bonds payable, due 2024 | 190,000 | 150,000 | 181,000 | |||
| Total liabilities | 375,000 | 330,000 | 361,000 | |||
| Shareholders’ equity | ||||||
| Common shares (20,000 issued) | 200,000 | 200,000 | 200,000 | |||
| Retained earnings | 186,000 | 129,000 | 69,000 | |||
| Total shareholders’ equity | 386,000 | 329,000 | 269,000 | |||
| Total liabilities and shareholders’ equity | $761,000 | $659,000 | $630,000 | |||
Additional information:
| 1. | Seventy-five percent of the sales were on account. | |
| 2. | The allowance for doubtful accounts was $3,000 in 2021, $5,000 in 2020, and $2,500 in 2019. | |
| 3. | In 2021 and 2020, dividends of $3,000 and $9,000, respectively, were paid to the common shareholders. | |
| 4. | Cash provided by operating activities was $103,500 in 2021 and $129,000 in 2020. | |
| 5. | Cash used by investing activities was $115,500 in 2021 and $32,000 in 2020. |
(a)
Calculate all possible liquidity, solvency, and profitability
ratios for 2021 and 2020. (Round answers for Collection
period, Days sales in inventory, Operating cycle and Free cash flow
to 0 decimal places, e.g. 125. Round answer for Earnings per share
to 2 decimal places, e.g. 12.50. Round all other answers to 1
decimal place, e.g. 12.5 or 12.5%. Enter negative amount using
either a negative sign preceding the number e.g. -45 or parentheses
e.g. (45).)
| 2021 | 2020 | ||||||||
| Liquidity Ratios | |||||||||
| 1. | Current ratio | : 1 | : 1 | ||||||
| 2. | Acid-test ratio | : 1 | : 1 | ||||||
| 3. | Receivables turnover | times | times | ||||||
| 4. | Collection period | days | days | ||||||
| 5. | Inventory turnover | times | times | ||||||
| 6. | Days sales in inventory | days | days | ||||||
| 7. | Operating cycle | days | days | ||||||
| Solvency Ratios | |||||||||
| 8. | Debt to total assets | % | % | ||||||
| 9. | Interest coverage | times | times | ||||||
| 10. | Free cash flow | $ | $ | ||||||
| Profitability Ratios | |||||||||
| 11. | Gross profit margin | % | % | ||||||
| 12. | Profit margin | % | % | ||||||
| 13. | Asset turnover | times | times | ||||||
| 14. | Return on assets | % | % | ||||||
| 15. | Return on equity | % | % | ||||||
| 16. | Earnings per share | $ | $ | ||||||
| 17. | Payout ratio | % | % | ||||||
Solutions
Expert Solution
| 2021 ($) | 2020 ($) | ||
| 1 | Current ratio | ||
| Cash | 94000 | 84000 | |
| Accounts receivable | 112000 | 112000 | |
| Inventories | 140000 | 135000 | |
| Prepaid expenses | 25000 | 23000 | |
| Current assets | 371000 | 354000 | |
| Notes payable | 110000 | 100000 | |
| Accounts payable | 43000 | 40000 | |
| Accrued liabilities | 32000 | 40000 | |
| Current liabilities | 185000 | 180000 | |
| Current rato (Current assets / Current liabilities) | 2.0 | 2.0 | |
| 2 | Acid-test ratio | ||
| Cash | 94000 | 84000 | |
| Accounts receivable | 112000 | 112000 | |
| Prepaid expenses | 25000 | 23000 | |
| Quick assets | 231000 | 219000 | |
| Notes payable | 110000 | 100000 | |
| Accounts payable | 43000 | 40000 | |
| Accrued liabilities | 32000 | 40000 | |
| Current liabilities | 185000 | 180000 | |
| Acid-test ratio (Quick assets / Current liabilities) | 1.2 | 1.2 | |
| 3 | Receivables turnover | ||
| Opening receivables | 112000 | 110000 | |
| Closing receivables | 112000 | 112000 | |
| Average receivables (Opening+Closing)/2 | 112000 | 111000 | |
| Credit sales (75% of sales) | 675000 | 630000 | |
| Receivables turnover (Credit sales/Average receivables) | 6.0 | 5.7 | |
| 4 | Collection period | ||
| Number of days in the year | 365 | 365 | |
| Receivables turnover | 6.0 | 5.7 | |
| Collection period (Number of days/Receivables turnover) | 61 | 64 | |
| 5 | Inventory turnover | ||
| Opening Inventory | 135000 | 96000 | |
| Closing Inventory | 140000 | 135000 | |
| Average Inventory (Opening+Closing)/2 | 137500 | 115500 | |
| Cost of goods sold (COGS) | 625000 | 575000 | |
| Inventory turnover (COGS/Average Inventory) | 4.5 | 5.0 | |
| 6 | Days sales in inventory | ||
| Number of days in the year | 365 | 365 | |
| Inventory turnover | 4.5 | 5.0 | |
| Days sales in inventory (Number of days / Inventory turnover) | 81 | 73 | |
| 7 | Operating cycle | ||
| Collection period | 61 | 64 | |
| Days sales In inventory | 81 | 73 | |
| Operating cycle (sum of both) | 142 | 137 | |
| 8 | Debt to total assets | ||
| Debt | 190000 | 150000 | |
| Total assets | 761000 | 659000 | |
| Debt to total assets (Debt/Total assets) | 25.0% | 22.8% | |
| 9 | Interest coverage | ||
| EBIT | 121000 | 115000 | |
| Interest expense | 30000 | 20000 | |
| Interest coverage (EBIT/Interest) | 4.0 | 5.8 | |
| 10 | Free cash flow | ||
| Cash from operating activities | 103500 | 129000 | |
| Capital expenditure | 115500 | 32000 | |
| Free cash flow (Cash from operations-Capex) | -12000 | 97000 | |
| 11 | Gross profit margin | ||
| Gross profit | 275000 | 265000 | |
| Sales | 900000 | 840000 | |
| Gross profit margin (GP/Sales) | 30.6% | 31.5% | |
| 12 | Profit margin | ||
| Profit | 64000 | 75000 | |
| Sales | 900000 | 840000 | |
| Profit margin (GP/Sales) | 7.1% | 8.9% | |
| 13 | Asset turnover | ||
| Sales | 900000 | 840000 | |
| Opening total assets | 659000 | 630000 | |
| Closing total assets | 761000 | 659000 | |
| Average total assets (opening+closing)/2 | 710000 | 644500 | |
| Asset turnover (sales/Average assets) | 1.3 | 1.3 | |
| 14 | Return on assets | ||
| Profit | 64000 |
 ekkarill92 answered 2 years agoRelated SolutionsComparative financial statements for Wildhorse and Novak Ltd. are shown below. WILDHORSE AND NOVAK LTD. Income...Comparative financial statements for Wildhorse and Novak Ltd.
are shown below.
WILDHORSE AND NOVAK LTD.
Income Statement
Year Ended December 31
2021
2020
Net sales
$900,000
$840,000
Cost of goods sold
625,000
575,000
Gross profit
275,000
265,000
Operating expenses
154,000
150,000
Profit from operations
121,000
115,000
Other revenues and expenses
Interest expense
30,000
20,000
Profit before income tax
91,000
95,000
Income tax expense
27,000
20,000
Profit
$64,000
$75,000
WILDHORSE AND NOVAK LTD.
Balance Sheet
December 31
Assets
2021
2020
2019...
Comparative financial statements for The Cullumber Company Ltd. are shown below. THE CULLUMBER COMPANY LTD. Income...Comparative financial statements for The Cullumber Company Ltd.
are shown below.
THE CULLUMBER COMPANY LTD.
Income Statement
Year Ended December 31
2021
2020
Net sales
$1,779,530
$1,819,610
Cost of goods sold
1,091,290
1,028,920
Gross profit
688,240
790,690
Operating expenses
521,960
422,530
Profit from operations
166,280
368,160
Interest expense
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18,630
Profit before income tax
140,630
349,530
Income tax expense
42,189
104,859
Profit
$98,441
$244,671
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Comparative financial statements for The Cullumber Company...
Problem 12-08A Presented below are the financial statements of Cheyenne Company. Cheyenne Company Comparative Balance Sheets...Problem 12-08A
Presented below are the financial statements of Cheyenne
Company.
Cheyenne Company
Comparative Balance Sheets
December 31
Assets
2022
2021
Cash
$ 112,000
$ 64,000
Accounts receivable
64,000
44,800
Inventory
89,600
64,000
Property, plant, and equipment
192,000
249,600
Accumulated depreciation
(102,400
)
(76,800
)
Total
$355,200
$345,600
Liabilities and Stockholders’ Equity
Accounts payable
$ 60,800
$ 48,000
Income taxes payable
22,400
25,600
Bonds payable
54,400
105,600
Common stock
57,600
44,800
Retained earnings
160,000
121,600
Total
$355,200
$345,600
Cheyenne Company...
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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...
The comparative condensed income statements of Emley Corporation are shown below.The comparative condensed income statements of Emley Corporation are shown below.
Instructions
(a) Prepare a horizontal analysis of the income statement data for Emley Corporation using 2016 as a base. (Show the amounts of increase or decrease.)
(b) Prepare a vertical analysis of the income statement data for Emley Corporation in columnar form for both years.
The comparative statements of Simpson Company are shown below. SIMPSON COMPANY Income Statements For the Years...
The comparative statements of Simpson Company are shown
below.
SIMPSON COMPANY
Income Statements
For the Years Ended December 31
2020
2019
Net sales
$780,000
$624,000
Cost of goods sold
440,000
405,600
Gross profit
340,000
218,400
Selling and administrative expenses
176,880
149,760
Income from operations
163,120
68,640
Other expenses and losses
Interest expense
9,920
7,200
Income before income taxes
153,200
61,440
Income tax expense
34,000
14,000
Net income
$119,200
$ 47,440
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
$138,200
$132,000...
The financial statements for Waverley Ltd are provided below: Waverley Ltd Comparative Balance Sheet As at...The financial statements for Waverley Ltd are provided
below:
Waverley Ltd
Comparative Balance Sheet
As at 30 June 2019 and 2020
2019
2020
Assets
Cash At Bank
167,000
215,000
Accounts Receivable
213,000
158,000
Inventory
68,000
73,000
Prepaid Rent
4,000
5,000
Buildings
320,000
350,000
Accumulated Depreciation – Buildings
(108,000)
(132,000)
Equipment
67,000
78,000
Accumulated Depreciation – Equipment
(25,000)
(26,000)
706,000
721,000
Liabilities
Accounts Payable
236,000
228,000
Dividend Payable
12,000
13,000
Salary Payable
18,000
20,000
Tax Payable
16,000
17,000
Bank Loan
158,000...
The financial statements for Waverley Ltd are provided below: Waverley Ltd Comparative Balance Sheet As at...The financial statements for Waverley Ltd are provided
below:
Waverley Ltd
Comparative Balance Sheet
As at 30 June 2019 and 2020
2019
2020
Assets
Cash At Bank
167,000
215,000
Accounts Receivable
213,000
158,000
Inventory
68,000
73,000
Prepaid Rent
4,000
5,000
Buildings
320,000
350,000
Accumulated Depreciation – Buildings
(108,000)
(132,000)
Equipment
67,000
78,000
Accumulated Depreciation – Equipment
(25,000)
(26,000)
706,000
721,000
Liabilities
Accounts Payable
236,000
228,000
Dividend Payable
12,000
13,000
Salary Payable
18,000
20,000
Tax Payable
16,000
17,000
Bank Loan
158,000...
The financial statements of Morgan Ltd appear below: Morgan LTD Comparative Statement of Financial Position 31...The financial statements of Morgan Ltd appear below:
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Comparative Statement of Financial Position
31 December 2018
________________________________________________________________________________________
Assets
2018
2017
Cash
..................................................................................................
$
25,000
$ 40,000
Marketable securities
...........................................................................
15,000
60,000
Accounts receivable (net)
.....................................................................
50,000
30,000
Inventory
............................................................................................
150,000
170,000
Property, plant and equipment (net)
......................................................
160,000
200,000
Total assets
..................................................................................
$400,000 $500,000
Liabilities and equity
Accounts payable
................................................................................
$
20,000
$ 30,000
Short-term notes payable
.....................................................................
40,000
90,000
Bonds payable...
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