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Case Question 12-22 Pippin Piping Co. manufactures decorative fabric trims. The companys financial statements follow. Pippin Piping Co. Comparative Income Statements For the Years Ended

Case Question 12-22

Pippin Piping Co. manufactures decorative fabric trims. The companys financial statements follow.
Pippin Piping Co. Comparative Income Statements For the Years Ended December 31
2016 2015 2014
Sales revenue $576,600 $523,000 $484,200
Cost of goods sold 291,000 259,200 234,300
Gross margin 285,600 263,800 249,900
Operating expenses 106,200 104,600 104,100
Operating income 179,400 159,200 145,800
Other revenue 22,500 15,900 23,900
Interest expense 11,200 10,500 11,900
Income before income tax 190,700 164,600 157,800
Income tax expense (40%) 76,280 65,840 63,120
Net income $114,420 $98,760 $94,680
Pippin Piping Co. Comparative Balance Sheets As of December 31
Assets 2016 2015 2014
Cash $32,000 $25,800 $20,500
Accounts receivable (net) 126,860 127,000 94,300
Inventory 60,000 80,700 56,000
Prepaid expenses 11,000 10,000 4,600
Total current assets 229,860 243,500 175,400
Property & equipment (net) 668,900 576,000 540,300
Total Assets $898,760 $819,500 $715,700
Liabilities and Stockholders Equity
Accounts payable $53,120 $81,200 $79,100
Accrued expenses 11,000 12,240 41,700
Total current liabilities 64,120 93,440 120,800
Long-term debt 170,000 160,000 150,000
Total liabilities 234,120 253,440 270,800
Stockholders Equity
Common stock, $0.50 par value 6,000 6,000 5,000
Additional paid-in capital 99,000 99,000 62,000
Retained earnings 559,640 461,060 377,900
Total stockholders equity 664,640 566,060 444,900
Total Liabilities and Stockholders Equity $898,760 $819,500 $715,700
Additional information
2016 2015 2014
Closing stock price $38 $35 $30
Shares outstanding 12,000 12,000 10,000
Dividends paid per share $1.32 $1.30 $1.25

(c1) Assess Pippins liquidity.

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Working capital 2014 $ 2015 $ 2016 $ Current ratio (Round answers to 2 decimal places, e.g. 52.75 2014 2015 2016 Acid test ratio (Round answers to 2 decimal places, e.g. 52.75. 2014 2015 2016

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