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The comparative statements of Cullumber Company are presented here: CULLUMBER COMPANY Income Statements For the Years...

The comparative statements of Cullumber Company are presented here:

CULLUMBER COMPANY
Income Statements
For the Years Ended December 31

2019

2018
Net sales

$1,899,240

$1,759,200
Cost of goods sold

1,067,240

1,014,700
Gross profit

832,000

744,500
Selling and administrative expenses

508,700

487,700
Income from operations

323,300

256,800
Other expenses and losses
   Interest expense

23,200

21,200
Income before income taxes

300,100

235,600
Income tax expense

93,200

74,200
Net income

$206,900

$161,400

CULLUMBER COMPANY
Balance Sheets
December 31

Assets

2019

2018
Current assets
   Cash

$60,100

$64,200
   Debt investments (short-term)

74,000

50,000
   Accounts receivable

126,500

111,500
   Inventory

127,200

116,700
     Total current assets

387,800

342,400
Plant assets (net)

663,000

534,300
Total assets

$1,050,800

$876,700

Liabilities and Stockholders’ Equity
Current liabilities
   Accounts payable

$168,700

$154,100
   Income taxes payable

44,700

43,200
     Total current liabilities

213,400

197,300
Bonds payable

234,000

214,000
     Total liabilities

447,400

411,300
Stockholders’ equity
   Common stock ($5 par)

290,000

300,000
   Retained earnings

313,400

165,400
     Total stockholders’ equity

603,400

465,400
Total liabilities and stockholders’ equity

$1,050,800

$876,700


All sales were on account. Net cash provided by operating activities for 2019 was $246,000. Capital expenditures were $135,000, and cash dividends were $58,900.

Compute the following ratios for 2019. (Round free cash flow to 0 decimal places, e.g. 5,275 and all other answers to 2 decimal places, e.g. 1.83 or 1.83%. Use 365 days for calculation.)

(a) Earnings per share

$enter a dollar amount
(b) Return on common stockholders’ equity

enter percentages

 %
(c) Return on assets

enter percentages

 %
(d) Current ratio

enter current ratio

 :1
(e) Accounts receivable turnover

enter the Accounts receivable turnover

 times
(f) Average collection period

enter a number of days

 days
(g) Inventory turnover

enter the Inventory turnover

 times
(h) Days in inventory

enter a number of days

 days
(i) Times interest earned

enter the Times interest earned

 times
(j) Asset turnover

enter the Asset turnover

 times
(k) Debt to assets ratio

enter percentages

 %
(l) Free cash flow

$enter a dollar amount rounded to 0 decimal places

Solutions

Expert Solution

Solution:

Ratios 2019
a Earning per share:
Net Income 206900
Less: Preferred dividend 0
Net income for commom stockholders 206900
Common stock($5 par) 290000
Number of common stock outstanding 58000
( Common stock amount/ par value per stock)
Earning per share 3.57 $
(Net income for commom stockholders/Outstanding shares) (206900/58000)
b. Return on common stockholder equity:
Net income for commom stockholders 206900
Total commom stockholder's equity 603400
Average commom stockholder's equity 534400
[(Ending+beginning)/2] =(603400+465400)/2
Return on common stockholder equity 38.72 %
(Net income for commom stockholders/ Average common stockholders equity) =206900/534400
c. Return on assets:
Total assets 1050800
Average total assets 963750
[(Ending+beginning)/2] =(1050800+876700)/2
Net income 206900
Return on assets: 21.47 %
(Net income/ Average total assets) =206900/963750
Note:Some investors calculate ROA by taking (Net income+ Interest expenses) instead of net income. You can use this also
Net income+ interest expense 230100
Return on assets 23.88 %
d. Current ratio
Total current assets 387800
Total current liabilities 213400
Current ratio 1.82 :1
(CA/CL) =387800/213400
e. Accounts receivable turnover:
Net sales 1899240
Accounts receivable 126500
Average account receivale 119000
[(Ending+beginning)/2] =(126500+111500)/2
Accounts receivable turnover: 15.96 times
(net sales/ avaerage account receivables) =1899240/119000
f. Average collection period
Net sales 1899240
Average account receivale 119000
Average collection period 22.87 days
( 365/ accounts receivable turnover) =365/15.96
g. Inventory turnover:
Inventory    127200
Average inventory 121950
[(Ending+beginning)/2] =(127200+116700)/2
Cost of goods sold 1067240
Inventory turnover 8.75 times
(cost/ average inventory) =1067240/121950
h. Days in inventory
Inventory turnover 8.75
Days in inventory 42.86 days
(365/Inventory turnover) =375/8.75
i. Times interest earned:
Income before interest and taxes 323300
Interest expense 23200
Times interest earned 13.94 times
(EBIT/ Interest expense) =323300/23200
j. Asset Turnover:
Average total assets 963750
Net sales 1899240
Asset Turnover 1.97 times
(Net sales/ average assets) =1899240/963750
k. Debt to assets:
Total debt 447400
ekkarill92 answered 1 year ago
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