Question 1 Cullumber Medical manufactures hospital beds and other institutional

Question

Question 1 Cullumber Medical manufactures hospital beds and other institutional furniture. The company's comparative balance sheet and income statement for 2015 and 2016 follovw Cullumber Medical Comparative Balance Sheet As of December 31 2016 2015 Assets Current assets Cash Accounts receivable, net Inventory Other current assets 339,000 $417,500 776,500 681,000 247,100 2,511,000 2,122,100 8,381,620 $11,892,730 10,503,720 1,068,000 738,000 366,000 Total current assets Property, plant, & equipment, net 9,381,730 Total assets Liabilities and Stockholders' Equity Current liabilities Long-term debt $3,146,000 $2,846,050 3,702,650 3,892,600 6,738,650 56,000 103,800 3,605,270 5,044,080 3,765,070 $11,892,730 $10,503,720 Total liabilities Preferred stock, $5 par value Common stoc, $0.25 par value Retained earnings 6,848,650 56,000 189,000 4,799,080 Total stockholders' equity Total liabilities and stockholders equity

Explanation / Answer

a Gross profit percentage = Gross profit/Net sales=5574000/10840000= 51.4% b Return on assets = Net income/Average assets=1662360/(11892730+10503720)/2= 14.8% c Beginning common stockholders' equity=(103800+3605270)= 3709070 Ending common stockholders' equity=(189000+4799080)= 4988080 Average common stockholders' equity=(3709070+4988080)/2= 4348575 Return on common stockholders' equity =(Net income-preferred dividends)/Average common equity=(1662360-29550)/4348575= 37.5%

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