15 continue.. Headland Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Headland and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $35,320 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $5,940 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Headland’s cash flow problems are due primarily to the company’s desire to finance a $302,050 plant expansion over the next 2 fiscal years through internally generated funds.
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Return on assets
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enter the return on assets in percentages rounded to 2 decimal places
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enter the return on assets in percentages rounded to 2 decimal places
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15 continue..
Headland Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Headland and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $35,320 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $5,940 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Headland’s
The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years.
Headland Corporation
Balance Sheet March 31 |
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Assets |
2021
|
2020
|
||
Cash
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$18,130 | $12,400 | ||
Notes receivable
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148,340 | 132,610 | ||
|
132,970 | 125,610 | ||
Inventories (at cost)
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105,280 | 49,700 | ||
Plant & equipment (net of
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1,442,810 | 1,431,850 | ||
Total assets
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$1,847,530 | $1,752,170 | ||
Liabilities and Owners’ Equity | ||||
Accounts payable
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$78,630 | $90,790 | ||
Notes payable
|
76,580 | 61,850 | ||
Accrued liabilities
|
18,110 | 29,430 | ||
Common stock (130,000 shares, $10 par)
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1,289,230 | 1,290,910 | ||
Retained earningsa
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384,980 | 279,190 | ||
Total liabilities and
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$1,847,530 | $1,752,170 | ||
aCash dividends were paid at the rate of $1 per share in fiscal year 2020 and $2 per share in fiscal year 2021. |
Headland Corporation
Income Statement For the Fiscal Years Ended March 31 |
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2021
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2020
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Sales revenue
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$3,007,270 | $2,709,810 | ||
Cost of goods solda
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1,522,790 | 1,432,430 | ||
Gross margin
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1,484,480 | 1,277,380 | ||
Operating expenses
|
860,800 | 775,260 | ||
Income before income taxes
|
623,680 | 502,120 | ||
Income taxes (40%)
|
249,472 | 200,848 | ||
Net income
|
$374,208 | $301,272 | ||
aDepreciation charges on the plant and equipment of $100,160 and $103,110 for fiscal years ended March 31, 2020 and 2021, respectively, are included in cost of goods sold. |
(a)
Compute the following items for Headland Corporation. (Round answers to 2 decimal places, e.g. 2.25 or 2.25%.)
1. | ||
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2. | Acid-test (quick) ratio for fiscal years 2020 and 2021. | |
3. | Inventory turnover for fiscal year 2021. | |
4. | Return on assets for fiscal years 2020 and 2021. (Assume total assets were $1,694,460 at 3/31/19.) | |
5. | Percentage change in sales, cost of goods sold, gross margin, and net income after taxes from fiscal year 2020 to 2021. |
5. |
Percent Changes
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Percent Increase
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Sales revenue
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enter percentages rounded to 2 decimal places
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% | |||
Cost of goods sold
|
enter percentages rounded to 2 decimal places
|
% | |||
Gross margin
|
enter percentages rounded to 2 decimal places
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% | |||
Net income after taxes
|
enter percentages rounded to 2 decimal places
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% |
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