Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2016, financial statements:

For the Year Ended December 31, 2016:
Net revenues	$	33,200
Cost of services provided		11,300
Depreciation expense		6,500
Operating income	$	15,400
Interest expense		3,400
Income tax expense		3,300
Net income	$	8,700
At December 31, 2016:
Assets
Cash and short-term investments	$	2,800
Accounts receivable, net		9,600
Property, plant, and equipment, net		84,400
Total assets	$	96,800
Liabilities and Stockholders' Equity
Accounts payable	$	1,400
Income taxes payable		1,300
Notes payable (long term)		53,400
Paid-in capital		11,000
Retained earnings		29,700
Total liabilities and stockholders' equity	$	96,800

At December 31, 2015, total assets were $82,000 and total stockholders' equity was $33,400. There were no changes in notes payable or paid-in capital during 2016.

5.

value: 16.66 points

Required information

e. Gerrard Construction Co. wishes to lease some new earthmoving equipment from Caterpillar on a long-term basis. What impact (increase, decrease, or no effect) would a capital lease of $3.6 million have on the company's debt ratio and debt/equity ratio?

	Increase
	Decrease
	No effect

References

WorksheetDifficulty: 2 Medium

6.

value: 16.70 points

Required information

f-1. Calculate the amount of dividends declared and paid during the year ended December 31, 2016. (Enter your answer in thousands (i.e., 20,000 should be entered as 20).)

f-2. Review the answer from part f-1. At this time. Assume that Gerrard Construction Co. had 1,100,000 shares of $1 par value common stock outstanding throughout 2016, and that the market price per share of common stock at December 31, 2016, was $18.72. Calculate the following profitability measures for the year ended December 31, 2016:

(Round your answer to 2 decimal places.)

(Round your answer to 1 decimal place.)

(Do not round intermediate calculations. Round your answers to 1 decimal place.)