Comparative financial statement data of Regan Optical Mart follow: (Click on the icon to view the income statements.) ) Click on the icon to view the balance sheets.) Other information: 1. Market price of Regan Optical Mart common stock: $153.00 at December 31, 2018, and $221.00 at December 31, 2017 2. Common shares outstanding: 11,000 during 2018 and 6,000 during 2017 3. All sales on credit 4. Cash dividends paid per share: $0.05 in 2018 and $0.30 in 2017 Read the requirements. Requirement 1. Calculate the ratios for 2018 and 2017. (Abbreviations used: Avg = average and o/s = outstanding.) a. Current ratio Select the formula and then enter the amounts to calculate the current ratio for 2018 and 2017. (Round the ratios to two decimal places, X.XX.) Current assets 1 Current liabilities Current ratio 2018 $ 561.000 1 $ 282,000 1.99 2017 $ 510,000 1 S 284,000 1.80 b. Quick (acid-test) ratio Select the formula and then enter the amounts to calculate the quick (acid-test) ratio for 2018 and 2017. (Round the ratios to two decimal places, X.XX.) Current liabilities = Quick (acid-test) ratio ( Cash + Short-term investments + Net current receivables 2018 ($ 257,000 )/ )/ $ 282,000 = 0.91 2017 ($ 203,000 284,000 0.71 = c. Receivables turnover and days' sales oustanding (DSO)-round to the nearest whole day Begin by selecting the formula and then enter the amounts to calculate receivables turnover for 2018 and 2017. (Round the ratios to two decimal places, X.XX.) Net credit sales Average net accounts receivables Accounts receivable turnover 2018 677000 2017 610000 ata Table - Regan Optical Mart Comparative Balance Sheets Regan Optical Mart December 31, 2018 and 2017 Comparative Income Statements 2018 2017 2016 Years Ended December 31, 2018 and 2017 Current assets: 2018 2017 Cash $ 46,000 $ 48,000 Net sales $ 677,000 $ 610,000 Current receivables, net 211,000 155,000 $ 140,000 374,000 281,000 Cost of goods sold Inventories 291,000 286,000 181,000 Gross profit 303,000 329,000 13,000 21,000 Prepaid expenses 133,000 148,000 Total current assets 561,000 510,000 Operating expenses Income from operations 170,000 181,000 289,000 275,000 Property, plant, and equipment, net 34,000 50,000 Interest expense $ 850,000 $ 785,000 Total assets 708,000 Income before income tax 136,000 131,000 37,000 53,000 Income tax expense Accounts payable $ 140,000 $ 112,000 118,000 $ 99,000 $ 78,000 Net income 142.000 172,000 Other current liabilties Total current liabilities 282,000 284,000 242,000 Print Done 236,000 Long-term liabilities Total liabilities 524.000 520,000 326.000 265,000 Common stockholders' equity, no par 190,000 $ 850,000 $ 785,000 Total liabilities and stockholders' equity * Selected 2016 amounts. Check Answer i Requirements b. Quick (acid-test) ratio c. Receivables turnover and days' sales oustanding (DSO)-round to the nearest whole day d. Inventory turnover and days' inventory outanding (DIO)-round to the nearest whole day e. Accounts payable turnover and days' payable outstanding (DPO)use cost of goods sold in the numerator of the turnover ratio and round DPO to the nearest whole day f. Cash conversion cycle (in days) g. Times-interest-earned ratio h. Return on assetsuse DuPont Analysis i. Return on common stockholders' equity-use DuPont Analysis j. Earnings per share of common stock k. Price-earnings ratio 2. Decide whether (a) Regan Optical Mart's financial position improved or deteriorated during 2018 and (b) the investment attractiveness of the company's common stock appears to have increased or decreased from 2017 to 2018 3. How will what you learned in this problem help you evaluate an investment
