The comparative statements of Pristine Interiors Ltd. are presented as follows:?

Additional information:

1. All sales were on account.

2. Weighted-average common shares in 2021 were 53,000 and in 2020 were 55,000.

Instructions

a. Calculate the following ratios for 2021 and 2020.

1. Gross profit margin?

2. Profit margin

3. Earnings per share?

4. Receivables turnover

5. Collection period

6. Inventory turnover

7. Days sales in inventory

8. Return on common shareholders? equity

9. Return on assets

10. Current ratio

11. Acid-test ratio

12. Asset turnover

13. Debt to total assets

b. Indicate whether each ratio has improved or deteriorated.

Taking It Further

Calculate Pristine Interiors? 2021 operating cycle and compare the results with those of its nearest competitor, which has an operating cycle of 75 days. Does Pristine Interiors have a liquidity problem?

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PRISTINE INTERIORS LTD. Income Statement For the Year Ended December 31 2021 2020 Net sales $2,055,750 $1,818,500 Cost of goods sold 1,169,000 1,011,500 Gross profit Selling and administrative expenses 886,750 807,000 499,000 510,000 Income from operations Other expenses and losses Interest expense 376,750 308,000 17,500 18,000 290,000 87,000 Profit before income tax 359,250 Income tax expense 107,775 Profit $ 251,475 $ 203,000 PRISTINE INTERIORS LTD. Balance Sheet December 31 Assets 2021 2020 2019 Current assets Cash $ 87,250 $129,100 $114,200 Accounts receivable 181,600 107,800 102,800 Inventory 216,800 133,000 115,500 Total current assets 485,650 369,900 332,500 520,300 Property, plant, and equipment (net) 650,700 600,300 Total assets $1,136,350 $970,200 $852,800 Liabilities and Shareholders' Equity Current liabilities Accounts payable Income taxes payable $ 283,175 45,000 $165,000 $145,400 43,500 42,000 Total current liabilities 328,175 208,500 187,400 Bonds payable 190,000 195,000 403,500 200,000 Total liabilities 518,175 387,400 Shareholders' equity Common shares 280,000 280,000 286,700 300,000 Retained earnings 338,175 165,400 Total shareholders' equity 618,175 566,700 465,400 Total liabilities and shareholders' equity $1,136,350 $970,200 $852,800