e. Calculate the 2017 profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say about these ratios?

f. Calculate the 2017 price/earnings ratio, price/cash flow ratio, and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company?

g. Perform a common size analysis and percentage change analysis. What do these analyses tell you about Computron?

Balance Sheets 2015 2016 2017E Assets Cash Short-term investments Accounts receivable Inventories Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets Total assets $ 9,000 48,600 351,200 715,200 $1,124,000 491,000 146,200 $ 344,800 $1,468,800 7,282 20,000 632,160 1,287,360 $1,946,802 1,202,950 263,160 $ 939,790 $2,886,592 $ 14,000 71,632 878,000 1,716,480 $2,680,112 1,220,000 383,160 $ 836,840 $3,516,952 Liabilities and Equity 2015 Accounts payable $ 145,600 Notes payable 200,000 Accruals 136,000 Total current liabilities $ 481,600 Long-term debt 323,432 Common stock (100,000 shares) 460,000 Retained earnings 203,768 Total equity $ 663,768 Total liabilities and equity $1,468,800 Note: "Tdenoles "estlmaled"; the 2017 dala are forecasts. 2016 $ 324,000 720,000 284,960 $1,328,960 1,000,000 460,000 97,632 $ 557,632 $2.886,592 2017E $ 359,800 300,000 380,000 $1,039,800 500,000 1,680,936 296,216 $1,977,152 $3,516,952 Income Statements Sales Cost of goods sold except depr. Depreciation and amortization Other expenses Total operating costs EBIT Interest expense Pre-tax earnings Taxes (40%) Net income 2015 $3,432,000 2,864,000 18,900 340,000 $3,222,900 $ 209,100 62,500 $ 146,600 58,640 $ 87,960 2016 $5,834,400 4,980,000 116,960 720,000 $5,816,960 $ 17,440 176,000 ($ 158,560) (63,424) ($ 95,136) 2017E $7,035,600 5,800,000 120,000 612,960 $6,532,960 $ 502,640 80,000 $ 422,640 169,056 $ 253,584 Note: "E denoles estimated"; the 2017 dala are forecasts. Other Data 2015 Stock price $8.50 Shares outstanding 100,000 EPS $0.880 DPS $0.220 Tax rate 40% Book value per share $6.638 Lease payments $40,000 Note: "I denotes "estimated"; the 2017 data are forecasts. 2016 $6.00 100,000 $0.951 $0.110 40% $5.576 $40,000 2017E $12.17 250,000 $1.014 $0.220 40% $7.909 $40,000 Ratio Analysis 2017E 2015 2.3 0.8 Industry Average 2.7 1.0 6.1 32.0 7.0 2.5 32.0% 50.0% 6.2 Current Quick Inventory turnover Days sales outstanding Fixed assets turnover Total assets turnover Debt ratio Liabilities-to-assets ratio TIE EBITDA coverage Profit margin Basic earning power ROA ROE Price/Earnings (P/E) Price/Cash flow Market/Book Note: "E denoles "estimaled." 2016 1.5 0.5 4.0 39.6 6.2 2.0 59.6% 80.7% 0.1 0.8 -1.6% 0.6% -3.3% -17.1% -6.3 27.5 1.1 4.0 37.3 10.0 2.3 35.6% 54.8% 3.3 2.6 2.6% 14.2% 6.0% 13.3% 9.7 8.0 1.3 8.0 3.6% 17.8% 9.0% 17.9% 16.2 7.6 2.9