Question

The comparative statements of Blossom Company are presented here.

BLOSSOM COMPANY Income Statements For the Years Ended December 31
		2022		2021
Net sales		$2,326,400		$2,170,000
Cost of goods sold		1,287,000		1,267,560
Gross profit		1,039,400		902,440
Selling and administrative expenses		630,000		603,540
Income from operations		409,400		298,900
Other expenses and losses
Interest expense		27,720		25,200
Income before income taxes		381,680		273,700
Income tax expense		114,504		82,110
Net income		$ 267,176		$ 191,590

BLOSSOM COMPANY Balance Sheets December 31
Assets		2022		2021
Current assets
Cash		$ 75,726		$ 80,892
Debt investments (short-term)		93,240		63,000
Accounts receivable		148,428		129,528
Inventory		158,760		145,530
Total current assets		476,154		418,950
Plant assets (net)		817,740		655,578
Total assets		$1,293,894		$1,074,528
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$ 201,600		$183,204
Income taxes payable		54,810		52,920
Total current liabilities		256,410		236,124
Bonds payable		277,200		252,000
Total liabilities		533,610		488,124
Stockholders’ equity
Common stock ($5 par)		365,400		378,000
Retained earnings		394,884		208,404
Total stockholders’ equity		760,284		586,404
Total liabilities and stockholders’ equity		$1,293,894		$1,074,528

All sales were on account. Net cash provided by operating activities for 2022 was $277,200. Capital expenditures were $171,360, and cash dividends were $80,696.

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

1. Earnings per share = Net Income / Common Stock outstanding
= $ 267,176 / 73080 = $3.655 per share
Common Stock outstanding = $365400/5 = 73080

2. Return on Common Stockholders Equity = Net Income / Average Stockholders Equity
= $267176 / 673344 = 39.68%
Average Stockholders Equity = ($760,284+586,404)/2 = $673344

3. Return on Assets = Net Income / Average Assets
= $267176/ 1184211= 22.56%
Average Assets = ($1,293,894+ $1,074,528)/2=1184211

4. Current Ratio = Current Assets / Current Liabilities
=$476,154 / 256,410= 1.85 times

5. Accounts Receivable turnover = Net Credit Sales / Average Accounts Receivables
= $2,326,400/ 138978 = 16.74times
Average Accounts Receivable = (148,428+ 129,528)/2 =138978

6. Average Collection Period = 365 / Accounts Receivable turnover
= 365 / 16.74 = 21.80 days

7. Inventory Turnover Ratio = Cost of goods sold / average inventory

= 1,287,000/ 152145= 8.45 times

Average Inventory = (beginning inventory + ending inventory)/2

=(145,530+ 158,760)/2 = 152145

8. Days sales in inventory = 365/ inventory turnover ratio

= 365/8.45 = 43.20 days

9 = times intrest earned = earning before interest and tax / interest

=(381,680+27,720)/27720 = 14.77

10. assets turnover ratio = net sales / average assets

= $2,326,400 / 1184211 = 1.9645 times

Average Assets = ($1,293,894+ $1,074,528)/2=1184211

11.debt to assets ratio = total debt / total assets

=533,610/ 1293894 = 41.24%

12. free cash flow = net cash provided by operating activity - dividend - capital expenditure

=277200- 80696 - 171360 =25144