The comparative statements of Blossom Company are presented here. BLOSSOM COMPAN
ID: 2332602 • Letter: T
Question
The comparative statements of Blossom Company are presented here.
BLOSSOM COMPANY
Income Statements
For the Years Ended December 31
2017
2016
$1,891,640
$1,751,600
1,059,640
1,007,100
832,000
744,500
501,100
480,100
330,900
264,400
23,100
21,100
307,800
243,300
93,100
74,100
$ 214,700
$ 169,200
BLOSSOM COMPANY
Balance Sheets
December 31
Assets
2017
2016
$ 60,100
$ 64,200
74,000
50,000
118,900
103,900
127,100
116,600
380,100
334,700
659,000
530,300
$1,039,100
$865,000
Liabilities and Stockholders’ Equity
$ 161,100
$146,500
44,600
43,100
205,700
189,600
230,000
210,000
435,700
399,600
290,000
300,000
313,400
165,400
603,400
465,400
$1,039,100
$865,000
All sales were on account. Net cash provided by operating activities for 2017 was $221,000. Capital expenditures were $135,000, and cash dividends were $66,700.
Compute the following ratios for 2017. (Round current ratio, earnings per share and asset turnover to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 2.5%. Use 365 days in calculation.)
Open Show Work
BLOSSOM COMPANY
Income Statements
For the Years Ended December 31
2017
2016
Net sales$1,891,640
$1,751,600
Cost of goods sold1,059,640
1,007,100
Gross profit832,000
744,500
Selling and administrative expenses501,100
480,100
Income from operations330,900
264,400
Other expenses and losses Interest expense23,100
21,100
Income before income taxes307,800
243,300
Income tax expense93,100
74,100
Net income$ 214,700
$ 169,200
Explanation / Answer
Part A
Earnings per share = net income / Average outstanding shares = 214700/59000 = 3.64
((290000+300000)/2)/5 = 59000
Part B
Return on common stockholders’ equity = net income / Average stockholders' equity = 214700/((603400+465400)/2) = 40.2%
Part C
Return on assets = net income / Average total assets = 214700/((1039100+865000)/2) = 22.6%
Part D
Current Ratio = current assets / current liabilities = 380100/205700 = 1.85
Part E
Accounts receivable turnover = sales / Average accounts receivable = 1891640/((118900+103900)/2) = 17.0 times
Part F
Average collection period = 365/accounts receivable turnover = 365/17.0 = 21.5 days
Part G
Inventory turnover = cost of goods sold / Average inventory = 1059640/((127100+116600)/2) = 8.7 times
Part H
Days in inventory = 365/inventory turnover = 365/8.7 = 42.0 days
Part I
Times interest earned = EBIT / interest = (307800+23100)/23100 = 14.3 times
Part J
Asset turnover = sales / Average total assets = 1891640/((1039100+865000)/2) = 1.99 times
Part K
Debt to assets ratio = total liabilities / total assets = 435700/1039100 = 41.9%
Part L
Free cash flow = Net cash provided by operating activities - Capital expenditures - cash dividends = 221000-135000-66700 = 19300