Answer:
Answer:
Wahlberg Company
(a) Earnings per share = $3.45 ($189,981/55,120) $3.17 ($190,200/60,020)
(b) Return on common stockholders' equity = 34.80% 40.61%
($189,981/$545,900) ($190,200/$468,300)
(c) Return on assets = 19.58% 22.25%
($189,951/$970,200) ($190,200/$854,800)
(d) Current ratio = 1.82 times 1.77 times
= Total current assets 371,300/ 330,900/
/Total current liabilities 204,300 186,500
(e) Accounts receivable turnover = 16.60 times
(f) Average collection period = 22 days
(g) Inventory turnover = 8.47 times
(h) Days in inventory = 43.1 days
(i) Times interest earned times = 16.4 times 19.6 times
(j) Asset turnover = 1.99x
(k) Debt to assets ratio = 43.37% 45.22%
(l) Free cash flow
= $94,000
Explanation:
a) Data and Calculations:
Wahlberg Company
Income Statement
For the Years Ended December 31
2020 2019
Net sales $1,813,600 $1,746,200
Cost of goods sold 1,013,400 990,000
Gross profit 800,200 756,200
Selling and administrative expenses 514,800 474,000
Income from operations 285,400 282,200
Other expenses and losses
Interest expense 17,400 14,400
Income before income taxes 268,000 267,800
Income tax expense 78,019 77,600
Net income $ 189,981 $ 190,200
Wahlberg Company
Balance Sheets December 31
Assets 2020 2019
Current assets
Cash $60,000 $64,700
Debt investments (short-term) 70,200 49,600
Accounts receivable 117,400 101,100
Inventory 123,700 115,500
Total current assets 371,300 330,900
Plant assets (net) 598,900 523,900
Total assets $970,200 $854,800
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $160,800 $144,700
Income taxes payable 43,500 41,800
Total current liabilities 204,300 186,500
Bonds payable 220,000 200,000
Total liabilities 424,300 386,500
Stockholders' equity
Common stock ($5 par) 275,600 300,100
Retained earnings 270,300 168,200
Total stockholders' equity 545,900 468,300
Total liabilities and
stockholders' equity $970,200 $854,800
Net cash provided by operating activities for 2020 was $230,000.
Capital expenditures were $136,000
Cash dividends were $87,881.
Earnings per share, 6.8 or 6.8%
Outstanding shares =55,120 ($275,600/$5) 60,020 ($300,100 /$5)
Average Receivable = $109,250 ($117,400 + $101,100)/2
Average inventory = $119,600 ($123,700 + $115,500)/2
Average assets = $912,500 ($970,200 + $854,800)/2
(a) Earnings per share = $3.45 ($189,981/55,120) $3.17 ($190,200/60,020)
(b) Return on common stockholders' equity = 34.80% 40.61%
($189,981/$545,900) ($190,200/$468,300)
(c) Return on assets = 19.58% 22.25%
($189,951/$970,200) ($190,200/$854,800)
(d) Current ratio = 1.82 times 1.77 times
= Total current assets 371,300/ 330,900/
/Total current liabilities 204,300 186,500
(e) Accounts receivable turnover = $1,813,600/$109,250 = 16.60 times
= Net Sales/Average Receivable
(f) Average collection period = $109,250/$1,813,600 * 365 = 22 days
(g) Inventory turnover = $1,013,400/$119,600 = 8.47 times
(h) Days in inventory = $119,600/$1,013,400 * 365 = 43.1 days
(i) Times interest earned times = EBIT/Interest Expense
= 16.4 times ($285,400/$17,400) 19.6 times ($282,200/$14,400)
(j) Asset turnover = Sales/Average Assets = $1,813,600/$912,500 = 1.99x
(k) Debt to assets ratio = 43.37% 45.22%
($424,300/$970,200) ($386,500/$854,800)
(l) Free cash flow = Net cash provided by operating activities - Capital expenditures
= $230,000 - $136,000
= $94,000