condensed financial statements of Vaughn Company for the years 2021 and 2022 are as follows. Vaughn Company Balance Sheets December 31 (in thousands) 2022 2021 Current assets Cash and cash equivalents $350 $350 Accounts receivable (net) 450 370 Inventory 470 420 Prepaid expenses 120 170 Total current assets 1,390 1,310 Property, plant, and equipment (net) 370 340 Investments 1 10 Other assets 490 470 Total assets $2,251 $2,130 Current liabilities $830 $730 Long-term liabilities 391 370 Stockholders’ equity—common 1,030 1,030 Total liabilities and stockholders’ equity $2,251 $2,130 Vaughn Company Income Statements For the Years Ended December 31 (in thousands) 2022 2021 Net sales $3,880 $3,530 Expenses Cost of goods sold 950 910 Selling and administrative expenses 2,420 2,340 Interest expense 10 20 Total expenses 3,380 3,270 Income before income taxes 500 260 Income tax expense 200 104 Net income $300 $156 Compute the following ratios for 2022 and 2021. Inventory on December 31, 2020, was $330. Assets on December 31, 2020, were $1,910. Stockholders’ equity—common on December 31, 2020, was $900. (Round current ratio and inventory turnover to 2 decimal places, e.g. 15.25. Round other answers to 1 decimal place, e.g. 15.2 or 15.2%.) 2022 2021 (a) Current ratio enter ratio rounded to 2 decimal places :1 enter ratio rounded to 2 decimal places :1 (b) Inventory turnover enter a number of times rounded to 2 decimal places times enter a number of times rounded to 2 decimal places times (c) Profit margin enter percentages rounded to 1 decimal place % enter percentages rounded to 1 decimal place

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 4PB

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Question

The condensed financial statements of Vaughn Company for the years 2021 and 2022 are as follows.

Vaughn Company Balance Sheets December 31 (in thousands)
	2022	2021
Current assets
Cash and cash equivalents	$350	$350
Accounts receivable (net)	450	370
Inventory	470	420
Prepaid expenses	120	170
Total current assets	1,390	1,310
Property, plant, and equipment (net)	370	340
Investments	1	10
Other assets	490	470
Total assets	$2,251	$2,130
Current liabilities	$830	$730
Long-term liabilities	391	370
Stockholders’ equity—common	1,030	1,030
Total liabilities and stockholders’ equity	$2,251	$2,130

Vaughn Company Income Statements For the Years Ended December 31 (in thousands)
	2022	2021
Net sales	$3,880	$3,530
Expenses
Cost of goods sold	950	910
Selling and administrative expenses	2,420	2,340
Interest expense	10	20
Total expenses	3,380	3,270
Income before income taxes	500	260
Income tax expense	200	104
Net income	$300	$156

Compute the following ratios for 2022 and 2021. Inventory on December 31, 2020, was $330. Assets on December 31, 2020, were $1,910. Stockholders’ equity—common on December 31, 2020, was $900. (Round current ratio and inventory turnover to 2 decimal places, e.g. 15.25. Round other answers to 1 decimal place, e.g. 15.2 or 15.2%.)

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