The comparative statements of Sheridan Company are presented here. SHERIDAN COMPANY Income Statements For the Years Ended December 31 2022 2021 Net sales $2,141,400 $1,995,000 Cost of goods sold 1,187,000 1,166,960 Gross profit 954,400 828,040 Selling and administrative expenses 580,000 555,640 Income from operations 374,400 272,400 Other expenses and losses Interest expense 25,520 23,200 Income before income taxes 348,880 249,200 Income tax expense 104,664 74,760 Net income $ 244,216 $ 174,440 SHERIDAN COMPANY Balance Sheets December 31 Assets 2022 2021 Current assets Cash $ 69,716 $ 74,472 Debt investments (short-term) 85,840 58,000 Accounts receivable 136,648 119,248 Inventory 146,160 133,980 Total current assets 438,364 385,700 Plant assets (net) 752,840 603,548 Total assets $1,191,204 $989,248 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 185,600 $168,664 Income taxes payable 50,460 48,720 Total current liabilities 236,060 217,384 Bonds payable 255,200 232,000 Total liabilities 491,260 449,384 Stockholders’ equity Common stock ($5 par) 336,400 348,000 Retained earnings 363,544 191,864 Total stockholders’ equity 699,944 539,864 Total liabilities and stockholders’ equity $1,191,204 $989,248 All sales were on account. Net cash provided by operating activities for 2022 was $255,200. Capital expenditures were $157,760, and cash dividends were $72,536. QUESTION: Compute the following ratios for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.) (a) Earnings per share = Net Income/average shares outstanding (b) Return on common stockholders’ equity = Net Income/Average Stockholders Equity % (c) Return on assets = Net Income/Average Total Assets % (d) Current ratio = Current assets/current liabliaties :1 (e) Accounts receivable turnover = Credit sales/average accounts receivable times (f) Average collection period = 365/accounts receivable turnover days (g) Inventory turnover = COGS/average inventory times (h) Days in inventory = 365/inventory turnover days (i) Times interest earned = EBIT/interest expense times (j) Asset turnover = net sales/average total assets times (k) Debt to assets ratio = Total liabilities/total assets % (l) Free cash flow = cash flow from operating activities – capital exp – cash dividend

The comparative statements of Sheridan Company are presented here. SHERIDAN COMPANY Income Statements For the Years Ended December 31 2022 2021 Net sales $2,141,400 $1,995,000 Cost of goods sold 1,187,000 1,166,960 Gross profit 954,400 828,040 Selling and administrative expenses 580,000 555,640 Income from operations 374,400 272,400 Other expenses and losses Interest expense 25,520 23,200 Income before income taxes 348,880 249,200 Income tax expense 104,664 74,760 Net income $ 244,216 $ 174,440 SHERIDAN COMPANY Balance Sheets December 31 Assets 2022 2021 Current assets Cash $ 69,716 $ 74,472 Debt investments (short-term) 85,840 58,000 Accounts receivable 136,648 119,248 Inventory 146,160 133,980 Total current assets 438,364 385,700 Plant assets (net) 752,840 603,548 Total assets $1,191,204 $989,248 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 185,600 $168,664 Income taxes payable 50,460 48,720 Total current liabilities 236,060 217,384 Bonds payable 255,200 232,000 Total liabilities 491,260 449,384 Stockholders’ equity Common stock ($5 par) 336,400 348,000 Retained earnings 363,544 191,864 Total stockholders’ equity 699,944 539,864 Total liabilities and stockholders’ equity $1,191,204 $989,248 All sales were on account. Net cash provided by operating activities for 2022 was $255,200. Capital expenditures were $157,760, and cash dividends were $72,536. QUESTION: Compute the following ratios for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.) (a) Earnings per share = Net Income/average shares outstanding (b) Return on common stockholders’ equity = Net Income/Average Stockholders Equity % (c) Return on assets = Net Income/Average Total Assets % (d) Current ratio = Current assets/current liabliaties :1 (e) Accounts receivable turnover = Credit sales/average accounts receivable times (f) Average collection period = 365/accounts receivable turnover days (g) Inventory turnover = COGS/average inventory times (h) Days in inventory = 365/inventory turnover days (i) Times interest earned = EBIT/interest expense times (j) Asset turnover = net sales/average total assets times (k) Debt to assets ratio = Total liabilities/total assets % (l) Free cash flow = cash flow from operating activities – capital exp – cash dividend

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 56P: The following selected information is taken from the financial statements of Arnn Company for its...

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The comparative statements of Sheridan Company are presented here.

SHERIDAN COMPANY Income Statements For the Years Ended December 31
	2022	2021
Net sales	$2,141,400	$1,995,000
Cost of goods sold	1,187,000	1,166,960
Gross profit	954,400	828,040
Selling and administrative expenses	580,000	555,640
Income from operations	374,400	272,400
Other expenses and losses
Interest expense	25,520	23,200
Income before income taxes	348,880	249,200
Income tax expense	104,664	74,760
Net income	$ 244,216	$ 174,440

SHERIDAN COMPANY Balance Sheets December 31
Assets	2022	2021
Current assets
Cash	$ 69,716	$ 74,472
Debt investments (short-term)	85,840	58,000
Accounts receivable	136,648	119,248
Inventory	146,160	133,980
Total current assets	438,364	385,700
Plant assets (net)	752,840	603,548
Total assets	$1,191,204	$989,248
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$ 185,600	$168,664
Income taxes payable	50,460	48,720
Total current liabilities	236,060	217,384
Bonds payable	255,200	232,000
Total liabilities	491,260	449,384
Stockholders’ equity
Common stock ($5 par)	336,400	348,000
Retained earnings	363,544	191,864
Total stockholders’ equity	699,944	539,864
Total liabilities and stockholders’ equity	$1,191,204	$989,248

All sales were on account. Net cash provided by operating activities for 2022 was $255,200. Capital expenditures were $157,760, and cash dividends were $72,536.

QUESTION:

Compute the following ratios for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)

(a)	Earnings per share = Net Income/average shares outstanding
(b)	Return on common stockholders’ equity = Net Income/Average Stockholders Equity	%
(c)	Return on assets = Net Income/Average Total Assets	%
(d)	Current ratio = Current assets/current liabliaties	:1
(e)	Accounts receivable turnover = Credit sales/average accounts receivable	times
(f)	Average collection period = 365/accounts receivable turnover	days
(g)	Inventory turnover = COGS/average inventory	times
(h)	Days in inventory = 365/inventory turnover	days
(i)	Times interest earned = EBIT/interest expense	times
(j)	Asset turnover = net sales/average total assets	times
(k)	Debt to assets ratio = Total liabilities/total assets	%
(l)	Free cash flow = cash flow from operating activities – capital exp – cash dividend

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