Condensed balance sheet and income statement data for Landwehr Corporation appear below: Additional information: 1. The market
Question:
Condensed balance sheet and income statement data for Landwehr Corporation appear below:
Additional information:
1. The market price of Landwehr's common shares was $4.00, $5.00, and $8.00 for 2015, 2016, and 2017, respectively.
2. All dividends were paid in cash.
3. Weighted-average common shares were 32,000 in 2017 and 31,000 in 2016.
Instructions
(a) Calculate the following ratios for 2016 and 2017.
1. Profit margin
2. Asset turnover
3. Earnings per share
4. Price-earnings ratio
5. Payout ratio
6. Debt to total assets
7. Gross profit margin
(b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in Landwehr Corporation's financial position and operating results from 2016 to 2017.
TAKING IT FURTHER
Roberto Landwehr is puzzled. He believes the profit margin of Landwehr is an indication the company is doing well. Julie Beck, his accountant, says that more information is needed to determine the firm's financial well-being. Who is correct? Why?
Step by Step Answer:
Accounting Principles
ISBN: 978-1119048473
7th Canadian Edition Volume 2
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak