CullumberMedical manufactures hospital beds and other institutional
furniture. The company’s comparative balance sheet and income statement for 2019 and 2020 follow.
Cullumber Medical
Comparative Balance Sheet
As of December 31
2020
2019
AssetsCurrent assets Cash$400,000$417,500 Accounts receivable, net1,056,000776,400 Inventory721,000681,050 Other current assets381,300247,050Total current assets2,558,3002,122,000Property, plant, & equipment, net8,710,2358,439,930 Total assets$11,268,535$10,561,930Liabilities and Stockholders’ EquityCurrent liabilities$3,208,000$2,846,000Long-term debt3,702,7003,892,650 Total liabilities6,910,7006,738,650Preferred stock, $5 par value59,00058,900Common stock, $0.25 par value104,700103,900Retained earnings4,194,1353,660,480 Total stockholders’ equity4,357,8353,823,280 Total liabilities and stockholders’ equity$11,268,535$10,561,930
Cullumber Medical
Comparative Income Statement and Statement of Retained Earnings
For the Year
2020
2019
Sales revenue (all on account)$10,177,300$9,613,900Cost of goods sold5,613,0005,298,700 Gross profit4,564,3004,315,200Operating expenses2,840,2502,634,200Net operating income1,724,0501,681,000Interest expense300,400308,600Net income before taxes1,423,6501,372,400Income taxes (30%)427,095411,720Net income$996,555$960,680Dividends paid Preferred dividends29,55029,500 Common dividends433,350413,100 Total dividends paid462,900442,600Net income retained533,655518,080Retained earnings, beginning of year3,660,4803,142,400Retained earnings, end of year$4,194,135$3,660,480
Calculate the following leverage ratios for 2020.(Round all answers to 2 decimal places, e.g. 2.55% or 2.55.)
a.Debt ratioenter percentages
%b.Debt-to-equity ratioenter a ratio
c.Times interest earned ratioenter a number of times
Sample Solution
