AP-21A LO 3 4 5 6 The income statements and balance sheets for Fallon Inc. are shown below for the last three fiscal years. Fallon Inc. Income Statement For the Year Ended 2018 $360,000 108,000 252,000 2017 $324,000 89.100 234,900 2016 $342,000 85,500 256,500 Sales Cost of Goods Sold Gross Profit Expenses Operating Expense Depreciation Expense Advertising Expense Interest Expense Total Expenses Income before Income Tax Expense Income Tax Expense Net Income 54,000 36,000 18,000 6,800 114,800 137,200 72,000 $ 65,200 48,600 32,400 16,200 7,650 104,850 130,050 64,800 $65,250 51,300 34,200 17,100 8,500 111,100 145,400 68,400 $77,000 Fallon Inc. Balance Sheet At the Year Ended Cash Short-Term Investments Accounts Receivable Merchandise Inventory Equipment Total Assets 2018 $63,650 11,000 48,000 18,000 110,000 $250.650 2017 $39,750 10,000 40,000 22,500 104,500 $216.750 2016 $36,000 8,000 32,000 27,000 83,600 $186,600 Accounts Payable Current Portion of Long-Term Debt Long-Term Debt Common Stock Retained Earnings Total Liabilities and Stockholders' Equity $52,800 8,500 68,000 66,000 55,350 $250,650 $44,000 8,500 76,500 57,600 30,150 $216.750 $35,200 8,500 85,000 57,000 900 $186,600 Chapter 20 Other Information 1 Fallon Inc. has an unlimited number of shares auth standing in each year for the entire year 2010 2) The following dividends were paid d number of shares authorired. The following number of common shares were entire year: 2018-50,000, 2017-48,000, 2016- 47,000 vidends were paid $40.000 in 2018. $36.000 in 2017 and 538,000 in 2016. Required a) Calculate the following ratios foram gratios for Fallon Inc. for 2017 and 2018 and state whether the ratio improved or weakened in 2018 Improved or Weakened 2018 2017 Gross Profit Margin Times Interest Earned Ratio Net Profit Margin Return on Equity (ROE) Return on Assets (ROA) Asset Turnover Current Ratio Quick Ratio Debt-to-Equity Ratio Debt-to-Total-Assets Ratio Days Sales Outstanding Accounts Receivable Turnover Days Sales in Inventory Inventory Turnover Book Value per Common Share Earnings per Share b) Fallon Inc. has a credit policy of 30 days. That is, it expects all customers to pay their bills within 30 days from sale. Comment on the company's ability to enforce this policy. Analysis Comment on the company's ability to cover its short-term debt obligations The stockholders' equity section of Adora Corporation Adora Corporation's balance sheet as at December 31, 2017 and 2018 is presented below. 2018 2017 Stockholders' Equity Paid-In Capital Preferred stock, 57, noncumulative, 10,000 shares authorized, 1,000 shares issued and outstanding Common stock, unlimited shares authorized, 50,000 shares issued and outstanding Total Paid-In Capital Retained Earnings Total Stockholders' Equity $100,000 $100,000 500,000 600,000 338.000 938,000 500,000 600,000 300,000 900,000 Both preferred and common stock do not have par value. There were no changes in the number of shares of preferred and common stock during 2017 and 2018. Adora announced and paid preferred dividends of 57 per share and common dividends of $0.50 per share in 2018. Its net income in 2018 was $70,000. Required a) Calculate Adora's return on equity for 2018. Round your answer to two decimal places