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
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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