Integrative Problem Presented here are a statement of income and retained earnings and comparative balance sheets for Gallagher, Inc., which operates a national chain of sporting goods stores. Gallagher, Inc. Statement of Income and Retained Earnings For the Year Ended December 31, 2016 (all amounts in thousands of dollars)

Net sales $48,000

Cost of goods sold 36,000

Gross profit $12,000

Selling, general, and administrative expense 6,000

Operating income $6,000

Interest expense 280

Income before tax $5,720

Income tax expense 2,280

Net income $3,440

Preferred dividends 100 Income available to common $3,340

Common dividends 500 To retained earnings $2,840

Retained earnings, 1/1 12,000

Retained earnings, 12/31 $14,840

Gallagher, Inc. Comparative Balance Sheets December 31, 2016 and 2015 (all amounts in thousands of dollars) December 31 2016 2015

Cash $840 $2,700

Accounts receivable 12,500 9,000

Inventory 8,000 5,500

Prepaid insurance 100 400

Total current assets $21,440 $17,600

Land $4,000 $4,000

Buildings and equipment 12,000 9,000

Accumulated depreciation (3,700) (3,000)

Total long-term assets $12,300 $10,000

Total assets $33,740 $27,600

Accounts payable $7,300 $5,000

Taxes payable 4,600 4,200

Notes payable 2,400 1,600

Current portion of bonds 200 200

Total current liabilities $14,500 $11,000

Bonds payable 1,400 1,600

Total liabilities $15,900 $12,600

Preferred stock, $5 par $1,000 $1,000

Common stock, $1 par 2,000 2,000

Retained earnings 14,840 12,000

Total stockholders equity $17,840 $15,000

Total liabilities and stockholders equity $33,740 $27,600

Required: 1. Prepare a statement of cash flows for Gallagher, Inc., for the year ended December 31, 2016, using the indirect method in the Operating Activities section of the statement. If an answer is zero, please enter zero ("0"). Use the minus sign to indicate cash outflows, a decrease in cash, or cash payments. Gallagher, Inc. Statement of Cash Flows For The Year Ended December 31, 2016 (In Thousands of Dollars)

Cash flows from operating activities $

Adjustments to reconcile net income to net cash provided by operating activities:

Net cash provided by operating activities $

Cash flows from investing activities $

Net cash used by investing activities $

Cash flows from financing activities $

Net cash provided by financing activities $

$

Cash balance, December 31, 2015

Cash balance, December 31, 2016 $

2. Gallagher's management is concerned with its short-term liquidity and its solvency over the long run. To help management evaluate these, compute the following ratios, rounding all answers to two decimal points. For percentages, round to two decimal places before converting to a percentage. For example, 0.881 would be entered as 88. Assume 360 days per year.

a. Current ratio to 1

b. Acid-test ratio to 1

c. Cash flow from operations to current liabilities ratio %

d. Accounts receivable turnover ratio times

e. Number of days' sales in receivables days

f. Inventory turnover ratio times

g. Number of days' sales in inventory days

h. Debt-to-equity ratio to 1

i. Debt service coverage ratio to 1

j. Cash flow from operations to capital expenditures ratio % 3.