The following financial information is for Priscoll Company.

Additional information:

1. Inventory at the beginning of 2024 was \(\$ 115,000\).

2. Accounts receivable (net) at the beginning of 2024 were \(\$ 86,000\).

3. Total assets at the beginning of 2024 were \(\$ 660,000\).

4. No common stock transactions occurred during 2024 or 2025.

Instructions

a. Compute liquidity and profitability ratios, and indicate the percentage change (to the nearest whole percentage) in liquidity and profitability ratios of Priscoll Company from 2024 to 2025. 

b. The following are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2025, and (2) as of December 31, 2026, and percentage change in each ratio after giving effect to the situation.
Situation 1. 18,000 shares of common stock were sold at par on July 1,2026 . Net income for 2026 was \(\$ 54,000\), and there were no dividends.

2. All of the notes payable were paid in 2026 . All other liabilities remained at their December 31, 2025, levels. Total assets on December 31, 2026, were \(\$ 900,000\).

3. The market price of common stock was \(\$ 9\) and \(\$ 12\) on December 31, 2025 and 2026, respectively. \(\mathrm{Net}\) income for 2026 was \(\$ 54,000\). (Use a simple average calculation for EPS.)

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Assets Cash Debt investments (short-term) Accounts receivable (net) Inventory Prepaid expenses Land Building and equipment (net) Total assets Priscoll Company Balance Sheets December 31 Liabilities and Stockholders' Equity Notes payable (current) Accounts payable Accrued liabilities Bonds payable, due 2028 Common stock, $10 par Retained earnings Total liabilities and stockholders' equity Net sales Cost of goods sold Gross profit Operating expenses Net income 2025 $ 70,000 55,000 104,000 230,000 25,000 130,000 260,000 $874,000 $170,000 65,000 40,000 250,000 200,000 149,000 $874,000 Priscoll Company Income Statements For the Years Ended December 31 2025 $882,000 640,000 242,000 190,000 $ 52,000 2024 $ 65,000 40,000 90,000 165,000 23,000 130,000 185,000 $698,000 $120,000 52,000 40,000 170,000 200,000 116,000 $698,000 2024 $790,000 575,000 215,000 167,000 $ 48,000