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

(b) Prepare common-size financial statements for the three years. (Round percentage answers to 1 decimal places, e.g. 52.7. List Assets in order of liquidity. Do not leave any answer field blank. Enter 0 for amounts. Enter negative amounts using either a negative sign preceding the number, e.g. -45.)

Income Statement 2016 2015 2014 0 0 Interest expense Cost of goods sold Income tax expense Operating expenses Other revenue Sales revenue 0 0 0 0 0 0 0 0 0 0 0