The comparative statements of Oriole Company are presented here. ORIOLE COMPANY Income Statements For the Years Ended December 31 2022 2021 Net sales $2,067,400 $1,925,000 Cost of goods sold 1,147,000 1,126,720 Gross profit 920,400 798,280 Selling and administrative expenses 560,000 536,480 Income from operations 360,400 261,800 Other expenses and losses Interest expense 24,640 22,400 Income before income taxes 335,760 239,400 Income tax expense 100,728 71,820 Net income $ 235,032 $ 167,580 ORIOLE COMPANY Balance Sheets December 31 Assets 2022 2021 Current assets Cash $ 67,312 $ 71,904 Debt investments (short-term) 82,880 56,000 Accounts receivable 131,936 115,136 Inventory 141,120 129,360 Total current assets 423,248 372,400 Plant assets (net) 726,880 582,736 Total assets $1,150,128 $955,136 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 179,200 $162,848 Income taxes payable 48,720 47,040 Total current liabilities 227,920 209,888 Bonds payable 246,400 224,000 Total liabilities 474,320 433,888 Stockholders’ equity Common stock ($5 par) 324,800 336,000 Retained earnings 351,008 185,248 Total stockholders’ equity 675,808 521,248 Total liabilities and stockholders’ equity $1,150,128 $955,136 All sales were on account. Net cash provided by operating activities for 2022 was $246,400. Capital expenditures were $152,320, and cash dividends were $69,272. Compute the following ratios for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.) (a) Earnings per share $enter earnings per share in dollars (b) Return on common stockholders’ equity enter return on common stockholders’ equity in percentages % (c) Return on assets enter return on assets in percentages %
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The comparative statements of Oriole Company are presented here.
|
ORIOLE COMPANY
Income Statements For the Years Ended December 31 |
||||
|---|---|---|---|---|
|
2022
|
2021
|
|||
|
Net sales
|
$2,067,400
|
$1,925,000
|
||
|
Cost of goods sold
|
1,147,000
|
1,126,720
|
||
|
Gross profit
|
920,400
|
798,280
|
||
|
Selling and administrative expenses
|
560,000
|
536,480
|
||
|
Income from operations
|
360,400
|
261,800
|
||
|
Other expenses and losses
|
||||
|
Interest expense
|
24,640
|
22,400
|
||
|
Income before income taxes
|
335,760
|
239,400
|
||
|
Income tax expense
|
100,728
|
71,820
|
||
|
Net income
|
$ 235,032
|
$ 167,580
|
|
ORIOLE COMPANY
Balance Sheets December 31 |
||||
|---|---|---|---|---|
|
Assets
|
2022
|
2021
|
||
|
Current assets
|
||||
|
Cash
|
$ 67,312
|
$ 71,904
|
||
|
Debt investments (short-term)
|
82,880
|
56,000
|
||
|
|
131,936
|
115,136
|
||
|
Inventory
|
141,120
|
129,360
|
||
|
Total current assets
|
423,248
|
372,400
|
||
|
Plant assets (net)
|
726,880
|
582,736
|
||
|
Total assets
|
$1,150,128
|
$955,136
|
||
|
Liabilities and
|
||||
|
Current liabilities
|
||||
|
Accounts payable
|
$ 179,200
|
$162,848
|
||
|
Income taxes payable
|
48,720
|
47,040
|
||
|
Total current liabilities
|
227,920
|
209,888
|
||
|
Bonds payable
|
246,400
|
224,000
|
||
|
Total liabilities
|
474,320
|
433,888
|
||
|
Stockholders’ equity
|
||||
|
Common stock ($5 par)
|
324,800
|
336,000
|
||
|
|
351,008
|
185,248
|
||
|
Total stockholders’ equity
|
675,808
|
521,248
|
||
|
Total liabilities and stockholders’ equity
|
$1,150,128
|
$955,136
|
All sales were on account. Net cash provided by operating activities for 2022 was $246,400. Capital expenditures were $152,320, and cash dividends were $69,272.
Compute the following ratios for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)
| (a) | Earnings per share |
$enter earnings per share in dollars
|
|||
| (b) | Return on common stockholders’ equity |
enter return on common stockholders’ equity in percentages
|
% | ||
| (c) | Return on assets |
enter return on assets in percentages
|
% | ||
| (d) |
enter current ratio
|
:1 | |||
| (e) | Accounts receivable turnover |
enter accounts receivable turnover in times
|
times | ||
| (f) | Average collection period |
enter average collection period in days
|
days | ||
| (g) | Inventory turnover |
enter inventory turnover in times
|
times | ||
| (h) | Days in inventory |
enter days in inventory
|
days | ||
| (i) | Times interest earned |
enter times interest earned
|
times | ||
| (j) | Asset turnover |
enter asset turnover in times
|
times | ||
| (k) | Debt to assets ratio |
enter debt to assets ratio in percentages
|
% | ||
| (l) |
$enter free cash flow in dollars
|
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