The market value of the company's equity for 2022 is: Multiple Choice $4,420,000 $5,695,000 $5,320,000 $11,200,000 $9,925,000
The market value of the company's equity for 2022 is: Multiple Choice $4,420,000 $5,695,000 $5,320,000 $11,200,000 $9,925,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The Sleep Company had the following operating results for 2021-2022. In addition, the company paid dividends in both 2021 and 2022 of $69,000 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
| Balance Sheet, December 31, | ||
| 2022 | 2021 | |
|---|---|---|
| Cash | $ 370,000 | $ 130,000 |
| Accounts Receivable | $ 380,000 | $ 430,000 |
| Inventory | $ 280,000 | $ 330,000 |
| Total Current Assets | $ 1,030,000 | $ 890,000 |
| Long-lived Assets | 1,380,000 | 1,400,000 |
| Total Assets | $ 2,410,000 | $ 2,290,000 |
| Current Liabilities | $ 230,000 | $ 330,000 |
| Long-term Debt | 630,000 | 530,000 |
| Shareholder Equity | 1,550,000 | 1,430,000 |
| Total Debt and Equity | $ 2,410,000 | $ 2,290,000 |
| Income Statement, for year ended December 31, | ||
| 2022 | 2021 | |
|---|---|---|
| Sales | $ 4,900,000 | $ 4,650,000 |
| Cost of Sales | 4,220,000 | 4,120,000 |
| Gross Margin | 680,000 | 530,000 |
| Operating Expenses | 365,000 | 415,000 |
| Operating Income | 315,000 | 115,000 |
| Taxes | 126,000 | 46,000 |
| Net Income | $ 189,000 | $ 69,000 |
| Cash Flow From Operations | 2022 | 2021 |
|---|---|---|
| Net Income | $ 189,000 | $ 69,000 |
| Plus Depreciation Expense | 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 | $ 239,000 | $ 119,000 |
The market value of the company's equity for 2022 is:
Multiple Choice
-
$4,420,000
-
$5,695,000
-
$5,320,000
-
$11,200,000
-
$9,925,000
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