6 The condensed financial statements of Underwood Company for the years 2019 and 2020 are presented as follows. (Amounts in thousands.)UNDERWOOD COMPANYBalance SheetsDecember 31 20202019Current assets Cash and cash equivalents$330$360Accounts receivable (net)470400Inventory460390Prepaid expenses120160Total current assets1,3801,310Investments1010Property, plant, and equipment420380Intangibles and other assets530510Total assets$2,340$2,210Current liabilities$900$790Long-term liabilities410380Stockholders’ equity—common1,0301,040Total liabilities and stockholders’ equity$2,340$2,210 UNDERWOOD COMPANYIncome StatementsFor the Years Ended December 31 20202019Sales revenue$3,800$3,460Costs and expenses Cost of goods sold955890Selling & administrative expenses2,4002,330Interest expense2520Total costs and expenses3,3803,240Income before income taxes420220Income tax expense12666Net income$294$154 Compute the following ratios for 2020 and 2019.Current ratio.Inventory turnover. (Inventory on 12/31/18 was $340.)Profit margin.

Answered: Compute the following ratios for 2020…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 10MC

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6 The condensed financial statements of Underwood Company for the years 2019 and 2020 are presented as follows. (Amounts in thousands.)

UNDERWOOD COMPANY Balance Sheets December 31
	2020	2019
Current assets
Cash and cash equivalents	$330	$360
Accounts receivable (net)	470	400
Inventory	460	390
Prepaid expenses	120	160
Total current assets	1,380	1,310
Investments	10	10
Property, plant, and equipment	420	380
Intangibles and other assets	530	510
Total assets	$2,340	$2,210
Current liabilities	$900	$790
Long-term liabilities	410	380
Stockholders’ equity—common	1,030	1,040
Total liabilities and stockholders’ equity	$2,340	$2,210

UNDERWOOD COMPANY Income Statements For the Years Ended December 31
	2020	2019
Sales revenue	$3,800	$3,460
Costs and expenses
Cost of goods sold	955	890
Selling & administrative expenses	2,400	2,330
Interest expense	25	20
Total costs and expenses	3,380	3,240
Income before income taxes	420	220
Income tax expense	126	66
Net income	$294	$154

Compute the following ratios for 2020 and 2019.

Current ratio.
Inventory turnover. (Inventory on 12/31/18 was $340.)
Profit margin.

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Compute the following ratios for 2020 and 2019. Current ratio. Inventory turnover. (Inventory on 12/31/18 was $340.) Profit margin.