The Harrison Bicycle Company had the following operating results for 2021-2022. In addition, the company paid dividends in both 2021 and 2022 of $80,000 per year and made capital expenditures in both years of $230,000 per year. The company's stock price in 2021 was $14.20 and $12.50 in 2022. Also in 2022, the industry average earnings multiple for the bicycle industry was 8 and the free cash flow and sales multiples were 16 and 1.35, respectively. The company is publicly owned and has 1,400,000 shares of outstanding stock at the end of 2022.
Balance Sheet, December 31,
2022 2021
Cash $ 267,000 $ 100,000
Accounts Receivable $ 525,000 $ 400,000
Inventory $ 450,000 $ 300,000
Total Current Assets $ 1,242,000 $ 800,000
Long-lived Assets 1,205,000 1,100,000
Total Assets $ 2,447,000 $ 1,900,000
Current Liabilities $ 500,000 $ 300,000
Long-term Debt 600,000 500,000
Shareholder Equity 1,347,000 1,100,000
Total Debt and Equity $ 2,447,000 $ 1,900,000
Income Statement, for year ended December 31,
2022 2021
Sales $ 6,250,000 $ 5,450,000
Cost of Sales 5,125,000 4,400,000
Gross Margin 1,125,000 1,050,000
Operating Expenses 580,000 550,000
Operating Income 545,000 500,000
Taxes 218,000 200,000
Net Income $ 327,000 $ 300,000
Cash Flow From Operations 2022 2021
Net Income $ 327,000 $ 300,000
Plus Depreciation Expense 125,000 125,000
+ Decrease (-increase) in Accounts Receivable and Inventory (275,000) 0
+ Increase (-decrease) in Current Liabilities 200,000 0
Cash Flow from Operations $ 377,000 $ 425,000
Return on assets for 2022 is (rounded):