FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Q5
The Sleep Company had the following operating results for 2021-2022. In addition, the company paid dividends in both 2021 and 2022 of $61,800 per year and made capital expenditures in both years of $30,000 per year. The company's stock price in 2021 was $8 and $7 in 2022. The industry average earnings multiple for the mattress industry was 9 in 2022 and the
2022 | 2021 | |
---|---|---|
Cash | $ 346,000 | $ 106,000 |
$ 356,000 | $ 406,000 | |
Inventory | $ 256,000 | $ 306,000 |
Total Current Assets | $ 958,000 | $ 818,000 |
Long-lived Assets | 1,140,000 | 1,160,000 |
Total Assets | $ 2,098,000 | $ 1,978,000 |
Current Liabilities | $ 206,000 | $ 306,000 |
Long-term Debt | 606,000 | 506,000 |
Shareholder Equity | 1,286,000 | 1,166,000 |
Total Debt and Equity | $ 2,098,000 | $ 1,978,000 |
Income Statement, for year ended December 31, | ||
2022 | 2021 | |
---|---|---|
Sales | $ 4,780,000 | $ 4,530,000 |
Cost of Sales | 4,124,000 | 4,024,000 |
Gross Margin | 656,000 | 506,000 |
Operating Expenses | 353,000 | 403,000 |
Operating Income | 303,000 | 103,000 |
Taxes | 121,200 | 41,200 |
Net Income | $ 181,800 | $ 61,800 |
Cash Flow From Operations | 2022 | 2021 |
---|---|---|
Net Income | $ 181,800 | $ 61,800 |
Plus |
50,000 | 50,000 |
+ Decrease (-increase) in Accounts Receivable and Inventory | 100,000 | 0 |
+ Increase (-decrease) in Current Liabilities | (-100,000) | 0 |
Cash Flow from Operations | $ 231,800 | $ 111,800 |
Return on equity for 2022 is (rounded):
Multiple Choice
-
13.9%
-
10.9%
-
12.8%
-
18.2%
-
14.8%
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