Question

The following financial information is for Sunland Company. Sunland Company Balance Sheets December 31 2020 2019 ssets Cash Debt investments (short-term) Accounts receivable Inventory Prepaid expenses Land Building and equipment (net) Total assets Liabilities and Stockholders' Equity Notes payable Accounts payable Accrued liabilities Bonds payable, due 2023 Common stock, $10 par Retained earnings Total liabilities and stockholders' equity $ 70,000 65,000 40,000 90,000 237,000 168,000 27,000 134,000 134,000 263,000 186,000 $891,000 $710,000 51,000 109,000 27,000 $169,000 $104,000 53,000 39,000 250,000 172,000 205,000205,000 159,000 137,000 $710,000 69,000 39,000 $891,000 Sunland Company Income Statements For the Years Ended December 31 2020 2019 $892,000 $784,000 644,000 576,000 248,000 208,000 Operating expenses 198,000 161,000 $ 50,000 47,000 Sales revenue Cost of goods sold Gross profit Net income

Answer 1

	Current ratio=Current asset/Current liabilities
				2019	2020	% change
	Current assets		(Note:1)	390000	494000
	Current liabilities			94019	110020
	Current ratio			4.15	4.49	8.19%
						(4.49-4.15)/4.15
	Note:1-Current assets
				2019	2020
	Cash			65000	70000
	Debt investments			40000	51000
	Accounts receivable			90000	109000
	Inventory			168000	237000
	Prepaid expenses			27000	27000
	Total current assets			390000	494000
	Note:2- Current liabilities
				2019	2020
	Accounts payable			53000	69000
	Accrued liabilities			39000	39000
	Total current liabilities			94019	110020
	Accounts receivable turnover ratio=Sales/ Average accounts receivable
	Average accounts receivable= (Beginning accounts receivable+Ending accounts receivable)/2
				2019	2020	% change
	Net sales			784000	892000
	Beginning accounts receivable (a)			90000	90000
	Ending accounts receivable (b)			90000	109000
	Accounts receivable		(a+b)/2	90000	99500
	Receivable turnover ratio			8.71	8.96	2.87%
						(8.96-8.71)/8.71
	Inventory turnover=Cost of goods sold/Average inventory
	Average inventory=(Beginning inventory+Ending inventory)/2
				2019	2020	% change
	Cost of goods sold			576000	644000
	Beginning inventory		(a)	115000	168000
	Ending inventory		(b)	168000	237000
	Average Inventory		(a+b)/2	141500	202500
	Inventory turnover ratio			4.07	3.18	-21.87%
						(3.18-4.07)/4.07
	profit margin=Net income/Sales revenue
				2019	2020	% change
	Net income   (a)			47000	50000
	Sales revenue (b)			784000	892000
	profit margin (a)/(b)			5.99%	5.61%	-6.34%
						(5.61-5.99)/5.99
	Asset turnover=Net sales/Average Total assets
	Average total assets=(Beginning total assets+ Ending total assets)/2
				2019	2020	% change
	Net sales			784000	892000
	Beginning total assets		a	640000	710000
	Ending total assets		b	710000	891000
	Average Total assets		(a+b)/2	675000	800500
	Asset turnover			1.16	1.11	-4.31%
						(1.11-1.16)/1.16
	Return on assets=Net income/Average total assets
				2019	2020	% change
	Net income			47000	50000
	Average Total assets			675000	800500
	Return on assets			6.96%	6.25%	-11.36%
						(6.25-6.96)/6.25
	Earnings per share=Net income/Shares outstanding
	Shares outstanding=Common stock/Par value
				2019	2020	% change
	Net income			47000	50000
	Common stock			205000	205000
	Par value			10	10
	Shares outstanding (b)			20500	20500
	Earnings per share (a)/(b)			2.29	2.44	6.55%
						(2.44-2.29)/2.29
	Return on common stockholder's equity=Net income/Average common stockholder's equity
	Average common stockholder's equity=(Beginning stockholder's equity+Ending stockholder's equity)/2
				2019	2020	2021
	Common stock			205000	205000	25000
						205000-(18000*10)
	Retained earnings			137000	159000	211000
						(159000+52000)
	Stockholder's equity			342000	364000	236000
				2020	2021	% change
	Net income			47000	50000
	Beginning stockholder's equity			342000	364000
	Ending stockholder's equity			364000	236000
	Average common stockholder's equity			353000	300000
	Return on common stockholder's equity			13.31%	16.67%	25.24%
						(16.67-13.31)/13.31