The comparative statements of Blossom Company are presented here. BLOSSOM COMPANY
Income Statements
For the Years Ended December 31
2022 2021
Net sales $1,512,400 $1,400,000
Cost of goods sold 847,000 804,800
Gross profit 665,400 595,200
Selling and administrative expenses 400,000 383,200
Income from operations 265,400 212,000
Other expenses and losses
Interest expense 17,600 16,000
Income before income taxes 247,800 196,000
Income tax expense 74,340 58,800
Net incom $ 173,460 $ 137,200
BLOSSOM COMPANY
Balance Sheets
December 31
Assets 2022 2021
Current assets
Cash $ 48,080 $ 51,360
Debt investments (short-term) 59,200 40,000
Accounts receivable 94,240 82,240
Inventory 100,800 92,400
Total current assets 302,320 266,000
Plant assets (net) 519,200 416,240
Total assets $821,520 $682,240
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $ 128,000 $116,320
Income taxes payable 34,800 33,600
Total current liabilities 162,800 149,920
Bonds payable 176,000 160,000
Total liabilities 338,800 309,920
Stockholders’ equity
Common stock ($4 par) 232,000 240,000
Retained earnings 250,720 132,320
Total stockholders’ equity 482,720 372,320
Total liabilities and stockholders’ equity $821,520 $682,240
All sales were on account. Net cash provided by operating activities for 2022 was $176,000. Capital expenditures were $108,800, and cash dividends were $55,060.

Compute the following ratios for 2022. (Round free cash flow to 0 decimal places, e.g. 5,275 and all other answers to 2 decimal places, e.8. 1.83 or 1.83 %. Use 365 days for calculation.) 59000

(a) Earnings per share

(b) Return on common stockholders' equity  

(c) Return on assets  

(d) Current ratio

(e) Accounts receivable turnover times

(f) Average collection period

(g) Inventory turnover

(h) Days in inventory

(i) Times interest earned

(j) Asset turnover

(k) Debt to Assets Ratio

(l) Free Cash Flow

BLOSSOM COMPANY

Computation of the following ratios:

(a) Earnings per share:

Earnings per share = Net Income/Average Outstanding Common Stock

= $ 173,460/59,000 = $2.94

Average Common Stock = [($232,000/$4) + ($240,000/$4)]/2

= (58,000 + 60,000)/2 = 59,000 shares.

(b) Return on common stockholders' equity = Net Income/Equity

= $173,460/ $482,720 x 100 = 35.93%

(c) Return on assets = EBIT / Total Assets

= $173,460/821,520 x 100 = 21.11%

(d) Current ratio = Current Assets/Current Liabilities

= $302,320/$162,800 = 1.86 : 1

(e) Accounts receivable turnover times = Average Receivables/Net Sales

= $88,240/$1,512,400 = 0.58 times

(f) Average collection period = Accounts receivable turnover times x 365

= 0.58 x 365 = 211.70 days

(g) Inventory turnover = Cost of goods sold/average inventory

= $847,000/96,600 = 8.77

(h) Days in inventory = 365/Inventory turnover = 365/8.77 = 41.62 days

(i) Times interest earned = EBIT/Interest = $265,400/$17,600 = 15.08 times

(j) Asset turnover = Net Sales / Average Assets = $1,512,400/$751,880

= 2.01

(k) Debt to Assets Ratio = Total Debt/Total Assets = $338,800/$821,520 x 100

= 41.24%

(l) Free Cash Flow = Net Cash from Operations + Depreciation - Capital Expenditure = $176,000 +$55,060 - $108,800 = $122,260

Explanation:

a) BLOSSOM COMPANY

Income Statements  For the Years Ended December 31

                                                                 2022                 2021

Net sales                                            $1,512,400       $1,400,000

Cost of goods sold                                847,000           804,800

Gross profit                                           665,400           595,200

Selling and administrative expenses  400,000            383,200

Income from operations                      265,400            212,000

Other expenses and losses:

Interest expense                                     17,600              16,000

Income before income taxes              247,800            196,000

Income tax expense                              74,340              58,800

Net income                                       $ 173,460          $ 137,200

b) BLOSSOM COMPANY

Balance Sheets  December 31

Assets                                            2022           2021

Current assets

Cash                                          $ 48,080      $ 51,360

Debt investments (short-term)   59,200        40,000

Accounts receivable                   94,240        82,240

Inventory                                   100,800         92,400

Total current assets                302,320       266,000

Plant assets (net)                    519,200         416,240

Total assets                          $821,520      $682,240

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable              $ 128,000        $116,320

Income taxes payable            34,800           33,600

Total current liabilities          162,800         149,920

Bonds payable                      176,000         160,000

Total liabilities                      338,800        309,920

Stockholders’ equity

Common stock ($4 par)     232,000       240,000

Retained earnings              250,720        132,320

Total stockholders’ equity 482,720        372,320

Total liabilities + equity    $821,520      $682,240

All sales were on account.  Net cash provided by operating activities for 2022 was $176,000. Capital expenditures were $108,800, and cash dividends were $55,060.

c)  These ratios measure an entity's financial performance and position and should not be interpreted as standalone figures.  They become more meaningful when compared over an entity's periods (trend analysis) and with competitors' or the industry averages.

answerreactive approach;