Wahlberg Company Income Statement For the Years Ended December 31 2020 2019
Net sales $1,813,600 $1,746,200 Cost of goods sold 1,013,400 990,000 Gross profit 800,200 756,200 Selling and administrative expenses 514,800 474,000 Income from operations 285,400 282,200 Other expenses and losses Interest expense 17,400 14,400 Income before income taxes 268,000 267,800 Income tax expense 78,019 77,600 Net income $ 189,981 $ 190,200
Wahlberg Company Balance Sheets December 31 Assets 2020 2019 Current assets Cash $60,000 $64,700 Debt investments (short-term) 70,200 49,600 Accounts receivable 117,400 101,100 123,700 Inventory 115,500 Total current assets 371,300 330,900 Plant assets (net) 598,900 523,900 $970,200 $854,800 Total assets Liabilities and Stockholders' Equity Plant assets (net) 598,900 523,900 $970,200 Total assets $854,800 Liabilities and Stockholders' Equity Current liabilities Accounts payable $160,800 $144,700 Income taxes payable 43,500 41,800 Total current liabilities 204,300 186,500 Bonds payable 220,000 200,000 424,300 Total liabilities 386,500 Stockholders' equity Common stock ($5 par) 275,600 300,100 Retained earnings 270,300 168,200 Total stockholders' equity 545,900 468,300 Total liabilities and stockholders' equity $970,200 $854,800 All sales were on account. Net cash provided by operating activities for 2020 was $230,000. Capital expenditures were $136,000, and cash dividends were $87,881. nings per share, 6.8 or 6.8%. Use 365 days for calculation.) 3.38 (a) Earnings per share (b) Return on common stockholders' equity 33.31 % (c) Return on assets 20.53 % (d) 1.82 :1 Current ratio 1.21 times (e) Accounts receivable turnover (f) 16.6 days Average collection period (g) Inventory turnover 15.16 times (h) 16.4 days Days in inventory 1.87 times (i) Times interest earned times (j) Asset turnover (k) Debt to assets ratio 22.32 % (l) Free cash flow

Wahlberg Company

(a) Earnings per share = $3.45 ($189,981/55,120) $3.17 ($190,200/60,020)

(b) Return on common stockholders' equity = 34.80%       40.61%

                                             ($189,981/$545,900)      ($190,200/$468,300)

(c) Return on assets    =         19.58%                       22.25%

                                             ($189,951/$970,200)      ($190,200/$854,800)

(d) Current ratio =                             1.82 times        1.77 times

= Total current assets                         371,300/    330,900/

/Total current liabilities                      204,300     186,500

(e) Accounts receivable turnover = 16.60 times

(f) Average collection period = 22 days

(g) Inventory turnover  = 8.47 times

(h) Days in inventory = 43.1 days

(i) Times interest earned times  = 16.4 times    19.6 times

(j) Asset turnover = 1.99x

(k) Debt to assets ratio  =   43.37%      45.22%

(l) Free cash flow  

= $94,000

Explanation:

a) Data and Calculations:

Wahlberg Company

Income Statement

For the Years Ended December 31

                                                                2020          2019

Net sales                                          $1,813,600   $1,746,200

Cost of goods sold                            1,013,400       990,000

Gross profit                                         800,200       756,200

Selling and administrative expenses 514,800       474,000

Income from operations                    285,400      282,200

Other expenses and losses

Interest expense                                   17,400         14,400

Income before income taxes            268,000      267,800

Income tax expense                             78,019         77,600

Net income                                      $ 189,981    $ 190,200

Wahlberg Company

Balance Sheets December 31

Assets                                                        2020          2019

Current assets

Cash                                                     $60,000     $64,700

Debt investments (short-term)              70,200       49,600

Accounts receivable                              117,400       101,100

Inventory                                               123,700      115,500

Total current assets                             371,300    330,900

Plant assets (net)                                598,900    523,900

Total assets                                      $970,200  $854,800

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable                            $160,800   $144,700

Income taxes payable                         43,500       41,800

Total current liabilities                      204,300     186,500

Bonds payable                                  220,000   200,000

Total liabilities                                   424,300    386,500

Stockholders' equity

Common stock ($5 par)                   275,600    300,100

Retained earnings                            270,300    168,200

Total stockholders' equity               545,900   468,300

Total liabilities and

stockholders' equity                    $970,200 $854,800

Net cash provided by operating activities for 2020 was $230,000.

Capital expenditures were $136,000

Cash dividends were $87,881.

Earnings per share, 6.8 or 6.8%

Outstanding shares    =55,120 ($275,600/$5)    60,020 ($300,100 /$5)

Average Receivable = $109,250 ($117,400 + $101,100)/2

Average inventory = $119,600 ($123,700 + $115,500)/2

Average assets = $912,500 ($970,200 + $854,800)/2

(a) Earnings per share = $3.45 ($189,981/55,120) $3.17 ($190,200/60,020)

(b) Return on common stockholders' equity = 34.80%       40.61%

                                             ($189,981/$545,900)      ($190,200/$468,300)

(c) Return on assets    =         19.58%                       22.25%

                                             ($189,951/$970,200)      ($190,200/$854,800)

(d) Current ratio =                             1.82 times        1.77 times

= Total current assets                         371,300/    330,900/

/Total current liabilities                      204,300     186,500

(e) Accounts receivable turnover  = $1,813,600/$109,250 = 16.60 times

= Net Sales/Average Receivable

(f) Average collection period = $109,250/$1,813,600  * 365 = 22 days

(g) Inventory turnover  = $1,013,400/$119,600 = 8.47 times

(h) Days in inventory = $119,600/$1,013,400 * 365 = 43.1 days

(i) Times interest earned times = EBIT/Interest Expense

= 16.4 times ($285,400/$17,400)      19.6 times ($282,200/$14,400)

(j) Asset turnover = Sales/Average Assets = $1,813,600/$912,500 = 1.99x

(k) Debt to assets ratio  =   43.37%      45.22%

                           ($424,300/$970,200)    ($386,500/$854,800)

(l) Free cash flow  = Net cash provided by operating activities - Capital expenditures

=  $230,000 - $136,000

= $94,000

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