The condensed financial statements of Sunland Company for the years 2021 and 2022 are presented as follows. (Amounts in thousands.) SUNLAND COMPANY Balance Sheets December 31 2022 2021 Current assets Cash and cash equivalents $330 $360 Accounts receivable (net) 550 480 Inventory 500 430 Prepaid expenses 120 160 Total current assets 1,500 1,430 Investments 90 90 Property, plant, and equipment (net) 420 380 Intangibles and other assets 530 510 Total assets $2,540 $2,410 Current liabilities $980 $870 Long-term liabilities 450 420 Stockholders’ equity—common 1,110 1,120 Total liabilities and stockholders’ equity $2,540 $2,410 SUNLAND COMPANY Income Statements For the Years Ended December 31 2022 2021 Net sales $3,840 $3,500 Expenses Cost of goods sold 1,035 970 Selling & administrative expenses 2,400 2,330 Interest expense 25 20 Total expenses 3,460 3,320 Income before income taxes 380 180 Income tax expense 114 54 Net income $ 266 $ 126 Compute the following ratios for 2022 and 2021. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 12.6%.) (a) Current ratio. (b) Inventory turnover. (Inventory on 12/31/20 was $420.) (c) Profit margin. (d) Return on assets. (Assets on 12/31/20 were $2,800.) (e) Return on common stockholders’ equity. (Stockholders’ equity—common on 12/31/20 was $910.) (f) Debt to assets ratio. (g) Times interest earned. 2022 2021 (a) Current ratio enter a number for current ratio rounded to 2 decimal places :1 enter a number for current ratio rounded to 2 decimal places :1 (b) Inventory turnover enter the Inventory turnover in times rounded to 2 decimal places times enter the Inventory turnover in times rounded to 2 decimal places times (c) Profit margin enter Profit margin in percentages rounded to 1 decimal place % enter Profit margin in percentages rounded to 1 decimal place % (d) Return on assets enter Return on assets in percentages rounded to 1 decimal place % enter Return on assets in percentages rounded to 1 decimal place % (e) Return on common stockholders’ equity enter Return on common stockholders’ equity in percentages rounded to 1 decimal place % enter Return on common stockholders’ equity in percentages rounded to 1 decimal place % (f) Debt to assets ratio enter Debt to assets ratio in percentages rounded to 1 decimal place % enter Debt to assets ratio in percentages rounded to 1 decimal place % (g) Times interest earned enter the Times interest earned rounded to 1 decimal place times enter the Times interest earned rounded to 1 decimal place times

The condensed financial statements of Sunland Company for the years 2021 and 2022 are presented as follows. (Amounts in thousands.) SUNLAND COMPANY Balance Sheets December 31 2022 2021 Current assets Cash and cash equivalents $330 $360 Accounts receivable (net) 550 480 Inventory 500 430 Prepaid expenses 120 160 Total current assets 1,500 1,430 Investments 90 90 Property, plant, and equipment (net) 420 380 Intangibles and other assets 530 510 Total assets $2,540 $2,410 Current liabilities $980 $870 Long-term liabilities 450 420 Stockholders’ equity—common 1,110 1,120 Total liabilities and stockholders’ equity $2,540 $2,410 SUNLAND COMPANY Income Statements For the Years Ended December 31 2022 2021 Net sales $3,840 $3,500 Expenses Cost of goods sold 1,035 970 Selling & administrative expenses 2,400 2,330 Interest expense 25 20 Total expenses 3,460 3,320 Income before income taxes 380 180 Income tax expense 114 54 Net income $ 266 $ 126 Compute the following ratios for 2022 and 2021. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 12.6%.) (a) Current ratio. (b) Inventory turnover. (Inventory on 12/31/20 was $420.) (c) Profit margin. (d) Return on assets. (Assets on 12/31/20 were $2,800.) (e) Return on common stockholders’ equity. (Stockholders’ equity—common on 12/31/20 was $910.) (f) Debt to assets ratio. (g) Times interest earned. 2022 2021 (a) Current ratio enter a number for current ratio rounded to 2 decimal places :1 enter a number for current ratio rounded to 2 decimal places :1 (b) Inventory turnover enter the Inventory turnover in times rounded to 2 decimal places times enter the Inventory turnover in times rounded to 2 decimal places times (c) Profit margin enter Profit margin in percentages rounded to 1 decimal place % enter Profit margin in percentages rounded to 1 decimal place % (d) Return on assets enter Return on assets in percentages rounded to 1 decimal place % enter Return on assets in percentages rounded to 1 decimal place % (e) Return on common stockholders’ equity enter Return on common stockholders’ equity in percentages rounded to 1 decimal place % enter Return on common stockholders’ equity in percentages rounded to 1 decimal place % (f) Debt to assets ratio enter Debt to assets ratio in percentages rounded to 1 decimal place % enter Debt to assets ratio in percentages rounded to 1 decimal place % (g) Times interest earned enter the Times interest earned rounded to 1 decimal place times enter the Times interest earned rounded to 1 decimal place times

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 21E

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The condensed financial statements of Sunland Company for the years 2021 and 2022 are presented as follows. (Amounts in thousands.)

SUNLAND COMPANY Balance Sheets December 31
	2022	2021
Current assets
Cash and cash equivalents	$330	$360
Accounts receivable (net)	550	480
Inventory	500	430
Prepaid expenses	120	160
Total current assets	1,500	1,430
Investments	90	90
Property, plant, and equipment (net)	420	380
Intangibles and other assets	530	510
Total assets	$2,540	$2,410
Current liabilities	$980	$870
Long-term liabilities	450	420
Stockholders’ equity—common	1,110	1,120
Total liabilities and stockholders’ equity	$2,540	$2,410

SUNLAND COMPANY Income Statements For the Years Ended December 31
	2022	2021
Net sales	$3,840	$3,500
Expenses
Cost of goods sold	1,035	970
Selling & administrative expenses	2,400	2,330
Interest expense	25	20
Total expenses	3,460	3,320
Income before income taxes	380	180
Income tax expense	114	54
Net income	$ 266	$ 126

Compute the following ratios for 2022 and 2021. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 12.6%.)

(a)		Current ratio.
(b)		Inventory turnover. (Inventory on 12/31/20 was $420.)
(c)		Profit margin.
(d)		Return on assets. (Assets on 12/31/20 were $2,800.)
(e)		Return on common stockholders’ equity. (Stockholders’ equity—common on 12/31/20 was $910.)
(f)		Debt to assets ratio.
(g)		Times interest earned.

		2022		2021
(a)	Current ratio	enter a number for current ratio rounded to 2 decimal places	:1		enter a number for current ratio rounded to 2 decimal places	:1
(b)	Inventory turnover	enter the Inventory turnover in times rounded to 2 decimal places	times		enter the Inventory turnover in times rounded to 2 decimal places	times
(c)	Profit margin	enter Profit margin in percentages rounded to 1 decimal place	%		enter Profit margin in percentages rounded to 1 decimal place	%
(d)	Return on assets	enter Return on assets in percentages rounded to 1 decimal place	%		enter Return on assets in percentages rounded to 1 decimal place	%
(e)	Return on common stockholders’ equity	enter Return on common stockholders’ equity in percentages rounded to 1 decimal place	%		enter Return on common stockholders’ equity in percentages rounded to 1 decimal place	%
(f)	Debt to assets ratio	enter Debt to assets ratio in percentages rounded to 1 decimal place	%		enter Debt to assets ratio in percentages rounded to 1 decimal place	%
(g)	Times interest earned	enter the Times interest earned rounded to 1 decimal place	times		enter the Times interest earned rounded to 1 decimal place	times

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Can you answer for the following:

(d)		Return on assets. (Assets on 12/31/20 were $2,800.)
(e)		Return on common stockholders’ equity. (Stockholders’ equity—common on 12/31/20 was $910.)
(f)		Debt to assets ratio.
(g)		Times interest earned.

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