Lanfield, Inc. Comparative Income Statement Years Ended December 31, 2024 and 2023 2024 2023 Net Sales Revenue $459,000 $428,000 Cost of Goods Sold 234,000 212,000 Gross Profit 225,000 216,000 Operating Expenses 134,000 132,000 Income From Operations 91,000 84,000 Interest Expense 13,000 16,000 Income Before Income Tax 78,000 68,000 Income Tax Expense 24,000 26,000 Net Income $54,000 $42,000 Lanfield, Inc. Comparative Balance Sheet December 31, 2024 and 2023 2024 2023 2022* Assets Current Assets: Cash $98,000 $97,000 Accounts Receivables, Net 114,000 115,000 $104,000 Merchandise Inventory 146,000 158,000 202,000 Prepaid Expenses 13,000 6,000 Total Current Assets 371,000 376,000 Property, Plant, and Equipment, Net 211,000 180,000 Total Assets $582,000 $556,000 $602,000 Liabilities Total Current Liabilities $227,000 $243,000 Long-term Liabilities 121,000 96,000 Total Liabilities 348,000 339,000 Stockholders' Equity Preferred Stock, 5% 98,000 98,000 Common Stockholders' Equity, no par 136,000 119,000 95,000 Total Liabilities and Stockholders' Equity $582,000 $556,000 * Selected 2022 amounts 1. Market price of Lanfield's common stock: $52.65 at December 31, 2024, and $37.05 at December 31, 2023. 2. Common shares outstanding: 15,000 on December 31, 2024 and 13,000 on December 31, 2023 and 2022. 3. All sales are on credit. Requirement 1a. Compute the current ratios for 2024 and 2023. Begin by selecting the formula to compute the current ratio. Current ratio = Part 2 Now, compute the current ratios for 2024 and 2023. (Round your answers to two decimal places, X.XX.) Current ratio 2024 2023 Part 3 Requirement 1b. Compute the cash ratios for 2024 and 2023. Begin by selecting the formula to compute the cash ratio. Cash ratio = Part 4 Now, compute the cash ratios for 2024 and 2023. (Round your answers to two decimal places, X.XX.) Cash ratio 2024 2023 Part 5 Requirement 1c. Compute the times-interest-earned ratios for 2024 and 2023. Begin by selecting the formula to compute the times-interest-earned ratio. Times-interest-earned ratio = Part 6 Now, compute the times-interest-earned ratios for 2024 and 2023. (Round your answers to two decimal places, X.XX.) Times-interest-earned ratio 2024 2023 Part 7 Requirement 1d. Compute the inventory turnover ratios for 2024 and 2023. Begin by selecting the formula to compute the inventory turnover ratio. Inventory turnover ratio = Part 8 Now, compute the inventory turnover ratios for 2024 and 2023. (Round your answers to two decimal places, X.XX.) Inventory turnover ratio 2024 2023 Part 9 Requirement 1e. Compute the gross profit percentage for 2024 and 2023. Begin by selecting the formula to compute the gross profit percentage. Gross profit percentage = Part 10 Now, compute the gross profit percentage for 2024 and 2023. (Round your answers to one tenth of a percent, X.X. Do not enter the %. For example, enter 10.2% as 10.2.) Gross profit % 2024 % 2023 % Part 11 Requirement 1f. Compute the debt to equity ratios for 2024 and 2023. Begin by selecting the formula to compute the debt to equity ratio. Debt to equity ratio = Part 12 Now, compute the debt to equity ratios for 2024 and 2023. (Round your answers to two decimal places, X.XX.) Debt to equity ratio 2024 2023 Part 13 Requirement 1g. Compute the rate of return on common stockholders' equity for 2024 and 2023. Begin by selecting the formula to compute the rate of return on common stockholders' equity. Rate of return on common stockholders' equity = Part 14 Now, compute the rate of return on common stockholders' equity for 2024 and 2023. (Round your answers to one tenth of a percent, X.X. Do not enter the %. For example, enter 10.2% as 10.2.) Rate of return on common stockholders' equity % 2024 % 2023 % Part 15 Requirement 1h. Compute the earnings per share of common stock for 2024 and 2023. Begin by selecting the formula to compute the earnings per share of common stock. Earnings per share = Part 16 Now, compute the earnings per share for 2024 and 2023. (Round your answers to the nearest cent, $X.XX.) Earnings per share of common stock 2024 2023 Part 17 Requirement 1i. Compute the price/earnings ratio for 2024 and 2023. Begin by selecting the formula to compute the price/earnings ratio. Price/earnings ratio = Part 18 Now, compute the price/earnings ratio for 2024 and 2023. (Round your interim calculations and final answers to two decimal places, X.XX.) Price/earnings ratio 2024 2023 Part 19 Requirement 2. Decide (a) whether Lanfield's ability to pay debts and to sell inventory improved or deteriorated during 2024 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased. (a) Did Lanfield's ability to pay its debts and to sell inventory improve or deteriorate during 2024? ▼ deteriorate improve Part 20 (b) Did the investment attractiveness of Lanfield's common stock appear to have increased or decreased? ▼ decreased increased
Lanfield, Inc. Comparative Income Statement Years Ended December 31, 2024 and 2023 2024 2023 Net Sales Revenue $459,000 $428,000 Cost of Goods Sold 234,000 212,000 Gross Profit 225,000 216,000 Operating Expenses 134,000 132,000 Income From Operations 91,000 84,000 Interest Expense 13,000 16,000 Income Before Income Tax 78,000 68,000 Income Tax Expense 24,000 26,000 Net Income $54,000 $42,000 Lanfield, Inc. Comparative Balance Sheet December 31, 2024 and 2023 2024 2023 2022* Assets Current Assets: Cash $98,000 $97,000 Accounts Receivables, Net 114,000 115,000 $104,000 Merchandise Inventory 146,000 158,000 202,000 Prepaid Expenses 13,000 6,000 Total Current Assets 371,000 376,000 Property, Plant, and Equipment, Net 211,000 180,000 Total Assets $582,000 $556,000 $602,000 Liabilities Total Current Liabilities $227,000 $243,000 Long-term Liabilities 121,000 96,000 Total Liabilities 348,000 339,000 Stockholders' Equity Preferred Stock, 5% 98,000 98,000 Common Stockholders' Equity, no par 136,000 119,000 95,000 Total Liabilities and Stockholders' Equity $582,000 $556,000 * Selected 2022 amounts 1. Market price of Lanfield's common stock: $52.65 at December 31, 2024, and $37.05 at December 31, 2023. 2. Common shares outstanding: 15,000 on December 31, 2024 and 13,000 on December 31, 2023 and 2022. 3. All sales are on credit. Requirement 1a. Compute the current ratios for 2024 and 2023. Begin by selecting the formula to compute the current ratio. Current ratio = Part 2 Now, compute the current ratios for 2024 and 2023. (Round your answers to two decimal places, X.XX.) Current ratio 2024 2023 Part 3 Requirement 1b. Compute the cash ratios for 2024 and 2023. Begin by selecting the formula to compute the cash ratio. Cash ratio = Part 4 Now, compute the cash ratios for 2024 and 2023. (Round your answers to two decimal places, X.XX.) Cash ratio 2024 2023 Part 5 Requirement 1c. Compute the times-interest-earned ratios for 2024 and 2023. Begin by selecting the formula to compute the times-interest-earned ratio. Times-interest-earned ratio = Part 6 Now, compute the times-interest-earned ratios for 2024 and 2023. (Round your answers to two decimal places, X.XX.) Times-interest-earned ratio 2024 2023 Part 7 Requirement 1d. Compute the inventory turnover ratios for 2024 and 2023. Begin by selecting the formula to compute the inventory turnover ratio. Inventory turnover ratio = Part 8 Now, compute the inventory turnover ratios for 2024 and 2023. (Round your answers to two decimal places, X.XX.) Inventory turnover ratio 2024 2023 Part 9 Requirement 1e. Compute the gross profit percentage for 2024 and 2023. Begin by selecting the formula to compute the gross profit percentage. Gross profit percentage = Part 10 Now, compute the gross profit percentage for 2024 and 2023. (Round your answers to one tenth of a percent, X.X. Do not enter the %. For example, enter 10.2% as 10.2.) Gross profit % 2024 % 2023 % Part 11 Requirement 1f. Compute the debt to equity ratios for 2024 and 2023. Begin by selecting the formula to compute the debt to equity ratio. Debt to equity ratio = Part 12 Now, compute the debt to equity ratios for 2024 and 2023. (Round your answers to two decimal places, X.XX.) Debt to equity ratio 2024 2023 Part 13 Requirement 1g. Compute the rate of return on common stockholders' equity for 2024 and 2023. Begin by selecting the formula to compute the rate of return on common stockholders' equity. Rate of return on common stockholders' equity = Part 14 Now, compute the rate of return on common stockholders' equity for 2024 and 2023. (Round your answers to one tenth of a percent, X.X. Do not enter the %. For example, enter 10.2% as 10.2.) Rate of return on common stockholders' equity % 2024 % 2023 % Part 15 Requirement 1h. Compute the earnings per share of common stock for 2024 and 2023. Begin by selecting the formula to compute the earnings per share of common stock. Earnings per share = Part 16 Now, compute the earnings per share for 2024 and 2023. (Round your answers to the nearest cent, $X.XX.) Earnings per share of common stock 2024 2023 Part 17 Requirement 1i. Compute the price/earnings ratio for 2024 and 2023. Begin by selecting the formula to compute the price/earnings ratio. Price/earnings ratio = Part 18 Now, compute the price/earnings ratio for 2024 and 2023. (Round your interim calculations and final answers to two decimal places, X.XX.) Price/earnings ratio 2024 2023 Part 19 Requirement 2. Decide (a) whether Lanfield's ability to pay debts and to sell inventory improved or deteriorated during 2024 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased. (a) Did Lanfield's ability to pay its debts and to sell inventory improve or deteriorate during 2024? ▼ deteriorate improve Part 20 (b) Did the investment attractiveness of Lanfield's common stock appear to have increased or decreased? ▼ decreased increased
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Topic Video
Question
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Lanfield, Inc.
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Comparative Income Statement
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Years Ended December 31, 2024 and 2023
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2024
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2023
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|---|---|---|
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Net Sales Revenue
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$459,000
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$428,000
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Cost of Goods Sold
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234,000
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212,000
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Gross Profit
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225,000
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216,000
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Operating Expenses
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134,000
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132,000
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Income From Operations
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91,000
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84,000
|
|
Interest Expense
|
13,000
|
16,000
|
|
Income Before Income Tax
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78,000
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68,000
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Income Tax Expense
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24,000
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26,000
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Net Income
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$54,000
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$42,000
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Lanfield, Inc.
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Comparative
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|||
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December 31, 2024 and 2023
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2024
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2023
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2022*
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|---|---|---|---|
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Assets
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|
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Current Assets:
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|
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Cash
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$98,000
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$97,000
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114,000
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115,000
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$104,000
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Merchandise Inventory
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146,000
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158,000
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202,000
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Prepaid Expenses
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13,000
|
6,000
|
|
|
Total Current Assets
|
371,000
|
376,000
|
|
|
Property, Plant, and Equipment, Net
|
211,000
|
180,000
|
|
|
Total Assets
|
$582,000
|
$556,000
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$602,000
|
|
Liabilities
|
|
|
|
|
Total Current Liabilities
|
$227,000
|
$243,000
|
|
|
Long-term Liabilities
|
121,000
|
96,000
|
|
|
Total Liabilities
|
348,000
|
339,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, 5%
|
98,000
|
98,000
|
|
|
Common Stockholders' Equity, no par
|
136,000
|
119,000
|
95,000
|
|
Total Liabilities and Stockholders' Equity
|
$582,000
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$556,000
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* Selected 2022 amounts
|
|
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|
1.
|
Market price of
Lanfield's
common stock:
$52.65
at December 31,
2024,
and
$37.05
at December 31,
2023.
|
|
2.
|
Common shares outstanding:
15,000
on December 31,
2024
and
13,000
on December 31,
2023
and
2022.
|
|
3.
|
All sales are on credit.
|
Requirement 1a. Compute the current ratios for
2024
and
2023.
Begin by selecting the formula to compute the current ratio .
|
Current ratio
|
=
|
|
Part 2
Now,
compute
the current ratios for
2024
and
2023.
(Round your answers to two decimal places, X.XX.)|
|
Current ratio
|
|---|---|
|
2024
|
|
|
2023
|
|
Part 3
Requirement 1b. Compute the cash ratios for
2024
and
2023.
Begin by selecting the formula to compute the cash ratio.
|
Cash ratio
|
=
|
|
Part 4
Now,
compute
the cash ratios for
2024
and
2023.
(Round your answers to two decimal places, X.XX.)|
|
Cash ratio
|
|---|---|
|
2024
|
|
|
2023
|
|
Part 5
Requirement 1c. Compute the times-interest-earned ratios for
2024
and
2023.
Begin by selecting the formula to compute the times-interest-earned ratio.
|
Times-interest-earned ratio
|
=
|
|
Part 6
Now,
compute
the times-interest-earned ratios for
2024
and
2023.
(Round your answers to two decimal places, X.XX.)|
|
Times-interest-earned ratio
|
|---|---|
|
2024
|
|
|
2023
|
|
Part 7
Requirement 1d. Compute the inventory turnover ratios for
2024
and
2023.
Begin by selecting the formula to compute the inventory turnover ratio.
|
Inventory turnover ratio
|
=
|
|
Part 8
Now,
compute
the inventory turnover ratios for
2024
and
2023.
(Round your answers to two decimal places, X.XX.)|
|
Inventory turnover ratio
|
|---|---|
|
2024
|
|
|
2023
|
|
Part 9
Requirement 1e. Compute the gross profit percentage for
2024
and
2023.
Begin by selecting the formula to compute the gross profit percentage.
|
Gross profit percentage
|
=
|
|
Part 10
Now,
compute
the gross profit percentage for
2024
and
2023.
(Round your answers to one tenth of a percent, X.X. Do not enter the %. For example, enter 10.2% as 10.2.)|
|
Gross profit %
|
|
|---|---|---|
|
2024
|
|
%
|
|
2023
|
|
%
|
Part 11
Requirement 1f. Compute the debt to equity ratios for
2024
and
2023.
Begin by selecting the formula to compute the debt to equity ratio.
|
Debt to equity ratio
|
=
|
|
Part 12
Now,
compute
the debt to equity ratios for
2024
and
2023.
(Round your answers to two decimal places, X.XX.)|
|
Debt to equity ratio
|
|---|---|
|
2024
|
|
|
2023
|
|
Part 13
Requirement 1g. Compute the rate of return on common stockholders' equity for
2024
and
2023.
Begin by selecting the formula to compute the rate of return on common stockholders' equity.
|
Rate of return on common
|
||
|
stockholders' equity
|
=
|
|
Part 14
Now,
compute
the rate of return on common stockholders' equity for
2024
and
2023.
(Round your answers to one tenth of a percent, X.X. Do not enter the %. For example, enter 10.2% as 10.2.)|
|
Rate of return on common stockholders' equity %
|
|
|---|---|---|
|
2024
|
|
%
|
|
2023
|
|
%
|
Part 15
Requirement 1h. Compute the earnings per share of common stock for
2024
and
2023.
Begin by selecting the formula to compute the earnings per share of common stock.
|
Earnings per share
|
=
|
|
Part 16
Now,
compute
the earnings per share for
2024
and
2023.
(Round your answers to the nearest cent, $X.XX.)|
|
Earnings per share of common stock
|
|---|---|
|
2024
|
|
|
2023
|
|
Part 17
Requirement 1i. Compute the price/earnings ratio for
2024
and
2023.
Begin by selecting the formula to compute the price/earnings ratio.
|
Price/earnings ratio
|
=
|
|
Part 18
Now,
compute
the price/earnings ratio for
2024
and
2023.
(Round your interim calculations and final answers to two decimal places, X.XX.)|
|
Price/earnings ratio
|
|---|---|
|
2024
|
|
|
2023
|
|
Part 19
Requirement 2. Decide (a) whether
Lanfield's
ability to pay debts and to sell inventory improved or deteriorated during
2024
and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.(a) Did
Lanfield's
ability to pay its debts and to sell inventory improve or deteriorate during
2024?
▼
deteriorate
improve
Part 20
(b) Did the investment attractiveness of
Lanfield's
common stock appear to have increased or decreased?
▼
decreased
increased
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