Question

Problem 13-03A Your answer is partially correct. Try again. Condensed balance sheet and income statement data for Flint Corporation are presented here. FLINT CORPORATION Balance Sheets December 31 2022 2020 2021 $ 22,000 $ 20,000 $ 32,000 Cash Accounts receivable (net) 47,000 50,000 52,000 93,000 Other current assets 98,000 67,000 48,000 58,000 73,000 Investments 500,000 370,000 Plant and equipment (net) 358,000 $735,000 $610,000 $543,000 $ 82,000 $ 72,000 $ 87,000 Current liabilities 53,000 Long-term debt 148,000 88,000 Common stock, $10 par 323,000 313,000 303,000 127,000 177,000 115,000 Retained earnings $735,000 $610,000 $543,000 FLINT CORPORATION Income Statements For the Years Ended December 31 2022 2021 $743,000 $603,000 Sales revenue 42,000 32,000 Less: Sales returns and allowances 701,000 Net sales 571,000 Cost of goods sold 428,000 353,000 Gross profit 273,000 218,000 182,000 152,000 Operating expenses (including income taxes) $ 91,000 $ 66,000 Net income Additional information: 1. The market price of Flint's common stock was $7.00, $7.50, and $8.50 for 2020, 2021, and 2022, respectively. 2. You must compute dividends paid. All dividends were paid in cash. Compute the following ratios for 2021 and 2022.

Problem 13-03A Partially correct answer. Your answer is partially correct. Try again. Condensed balance sheet and income statement data for Flint Corporation are presented here. FLINT CORPORATION Balance Sheets December 31 2022 2021 2020 Cash $ 32,000 $ 22,000 $ 20,000 Accounts receivable (net) 52,000 47,000 50,000 Other current assets 93,000 98,000 67,000 Investments 58,000 73,000 48,000 Plant and equipment (net) 500,000 370,000 358,000 $735,000 $610,000 $543,000 Current liabilities $ 87,000 $ 82,000 $ 72,000 Long-term debt 148,000 88,000 53,000 Common stock, $10 par 323,000 313,000 303,000 Retained earnings 177,000 127,000 115,000 $735,000 $610,000 $543,000 FLINT CORPORATION Income Statements For the Years Ended December 31 2022 2021 Sales revenue $743,000 $603,000 Less: Sales returns and allowances 42,000 32,000 Net sales 701,000 571,000 Cost of goods sold 428,000 353,000 Gross profit 273,000 218,000 Operating expenses (including income taxes) 182,000 152,000 Net income $ 91,000 $ 66,000 Additional information: 1. The market price of Flint’s common stock was $7.00, $7.50, and $8.50 for 2020, 2021, and 2022, respectively. 2. You must compute dividends paid. All dividends were paid in cash. Compute the following ratios for 2021 and 2022. 2022 2021 Profit margin enter percentagesEntry field with correct answer 13 % enter percentagesEntry field with correct answer 11.6 % (Round answers to 1 decimal place, e.g. 1.5%.) Gross profit rate enter percentagesEntry field with correct answer 38.9 % enter percentagesEntry field with correct answer 38.2 % (Round answers to 1 decimal place, e.g. 1.5%.) Asset turnover enter asset turnover in timesEntry field with correct answer 1.05 times enter asset turnover in timesEntry field with correct answer .99 times (Round answers to 2 decimal places, e.g. 1.83.) Earnings per share $enter earnings per share in dollarsEntry field with incorrect answer 2.11 $enter earnings per share in dollarsEntry field with incorrect answer 2.82 (Round answers to 2 decimal places, e.g. 1.83.) Price-earnings ratio enter price-earnings ratio in timesEntry field with correct answer 3 times enter price-earnings ratio in timesEntry field with correct answer 3.6 times (Round answers to 1 decimal place, e.g. 1.5.) Payout ratio enter percentagesEntry field with correct answer 45 % enter percentagesEntry field with correct answer 82 % (Round answers to 0 decimal places, e.g. 15%.) Debt to assets ratio enter percentagesEntry field with correct answer 32 % enter percentagesEntry field with correct answer 28 % (Round answers to 0 decimal places, e.g. 15%.)

Answer 1

2022:

Average common stock = ($323,000 + $313,000) / 2
Average common stock = $318,000

Average number of shares outstanding = Average common stock / Par value per share
Average number of shares outstanding = $318,000 / $10
Average number of shares outstanding = 31,800

Earnings per share = Net income / Average number of shares outstanding
Earnings per share = $91,000 / 31,800
Earnings per share = $2.86

2021:

Average common stock = ($313,000 + $303,000) / 2
Average common stock = $308,000

Average number of shares outstanding = Average common stock / Par value per share
Average number of shares outstanding = $308,000 / $10
Average number of shares outstanding = 30,800

Earnings per share = Net income / Average number of shares outstanding
Earnings per share = $66,000 / 30,800
Earnings per share = $2.14