Comparative financial statement data of Lodgepole Furniture Company follow:

Other information follows:

a. Market price of a share of common stock was $50.00 at December 31, 2018, and $33.00 at December 31, 2017.

b. An average of 11,000 common shares were outstanding during 2018 and 8,000 during 2017.

Requirements

1. Compute the following ratios for 2018 and 2017. Round to two decimal places. Assume all sales are on credit.

a. Current ratio

b. Inventory turnover

c. Accounts receivable turnover

d. Interest coverage ratio

e. Return on equity

f. Earnings per share of common stock

g. Price-earnings ratio

2. Decide

(a) Whether Lodgepole Furniture Company?s performance improved or deteriorated during 2018

(b) Whether the attractiveness of its common stock as an investment seems to have increased or decreased.

3. How will what you learned in this problem help you evaluate an investment?

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Lodgepole Furniture Company Income Statement Years Ended December 31, 2018 and 2017 2018 2017 $494,000 $464,000 Net Sales Cost of Goods Sold 242,000 252,000 233,000 231,000 Gross Profit Operating Expenses Income from Operations Interest Expense 135,000 117,000 8,000 140,000 91,000 18,000 Income Before Income Tax 109,000 28,000 $ 81,000 73,000 24,000 $ 49,000 Income Tax Expense Net Income Lodgepole Furniture Company Balance Sheet December 31, 2018 and 2017 (Selected 2016 amounts given for computation of ratios) 2018 2017 2016 Current Assets: Cash $ 98,000 $102,000 Accounts Receivable, Net 103,000 95,000 $106,000 Inventory Prepaid Expenses 167,000 158,000 189,000 32,000 400,000 18,000 373,000 Total Current Assets Property, Plant, and Equipment, Net 197,000 178,000 Total Assets $597,000 $551,000 Total Current Liabilities $212,000 $232,000 Long-Term Liabilities 124,000 114,000 346,000 Total Liabilities 336,000 261,000 205,000 Common Stockholders' Equity, No Par Total Liabilities and Stockholders' Equity 197,000 $597,000 $551,000