Problem 13-2A BLOSSOM COMPANY Income Statements For the Years Ended December 31
ID: 2594064 • Letter: P
Question
Problem 13-2A
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
Warning
Don't show me this message again for the assignment
Ok Cancel
Open Show Work
Problem 13-2A
The comparative statements of Blossom Company are presented here.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
BLOSSOM COMPANY
Balance Sheets
December 31
Assets
2017
2016
Current assets Cash$ 60,100
$ 64,200
Debt investments (short-term)74,000
50,000
Accounts receivable118,900
103,900
Inventory127,100
116,600
Total current assets380,100
334,700
Plant assets (net)659,000
530,300
Total assets$1,039,100
$865,000
Liabilities and Stockholders’ Equity
Current liabilities Accounts payable$ 161,100
$146,500
Income taxes payable44,600
43,100
Total current liabilities205,700
189,600
Bonds payable230,000
210,000
Total liabilities435,700
399,600
Stockholders’ equity Common stock ($5 par)290,000
300,000
Retained earnings313,400
165,400
Total stockholders’ equity603,400
465,400
Total liabilities and stockholders’ equity$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 all answers to 2 decimal places, e.g. 1.83 or 1.83%.)
(a) Earnings per share $ (b) Return on common stockholders’ equity % (c) Return on assets % (d) Current ratio :1 (e) Accounts receivable turnover times (f) Average collection period days (g) Inventory turnover times (h) Days in inventory days (i) Times interest earned times (j) Asset turnover times (k) Debt to assets ratio % (l) Free cash flow $
Warning
Don't show me this message again for the assignment
Ok Cancel
Click if you would like to Show Work for this question:Open Show Work
Explanation / Answer
217400/58000*=3.70
*290000/5=58000
214700/534400*=40.18%
*(465400+603400)/2=534400
1891640/952050*=1.99
*(865000+1039100)/2=952050
214700/952050*=22.55%
*(865000+1039100)/2=952050
214700/111400*=1.93
*(103900+118900)/2=1.93
1059640/121850*=8.70
*(116600+127100)/2=121850
Formula Ratio a. Earnings per share=Net Income – Preferred dividends/Weighted Average Number of Common Shares Outstanding217400/58000*=3.70
*290000/5=58000
b. Return on common stockholders’ equity= Net Income-Preferred Dividend/Average common stockholders’ equity214700/534400*=40.18%
*(465400+603400)/2=534400
j. Asset turnover=Net Sales/Average Total Asset1891640/952050*=1.99
*(865000+1039100)/2=952050
c. Return on total assets= Net Income/Average Total Asset214700/952050*=22.55%
*(865000+1039100)/2=952050
d. Current ratio = Current Asset/Current Liablities 380100/205700=1.85 e. Account Receivable Turnover Ratio=Net Credit Sales/Average Accounts Receivable214700/111400*=1.93
*(103900+118900)/2=1.93
f. Number of days’ sales in receivables = 365/Account Receivable Turnover Ratio 365/1.93= 189 days g. Inventory turnover= Cost of Goods Sold/Average Inventory1059640/121850*=8.70
*(116600+127100)/2=121850
h. Number of days’ sales in inventory=Ending Inventory/Cost of Goods Sold*365 121850/1059640*365=42 days i. Times interest earned= Eaning before interest and Tax expense/Interest expense 330900/23100=14.3 k. Debt to Total Asset Ratio=Total Debt OR Total Liability/Total Assets 435700/1039100=0.42 l. Free cash flow= Net cash provided by operating activities-capital expenditure 221000-135000 =86000