Nash Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Nash and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2018, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,750 notes, which are due on June 30, 2018, and September 30, 2018. Another note of $5,990 is due on March 31, 2019, but he expects no difficulty in paying this note on its due date. Brown explained that Nash's cash flow problems are due primarily to the company's desire to finance a $299,300 plant expansion over the next 2 fiscal years through internally generated funds.

The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years.

NASH CORPORATION

BALANCE SHEET

MARCH 31

Assets

2018

2017

Cash

$18,270

$12,430Notes receivable

148,780

130,950Accounts receivable (net)

131,230

125,720Inventories (at cost)

104,200

49,640Plant & equipment (net of depreciation)

1,452,000

1,431,290Total assets

$1,854,480

$1,750,030

Liabilities and Owners' Equity

Accounts payable

$78,690

$91,120Notes payable

76,200

61,750Accrued liabilities

5,420

19,930Common stock (130,000 shares, $10 par)

1,307,580

1,296,530Retained earnings^a

386,590

280,700Total liabilities and stockholders' equity

$1,854,480

$1,750,030

^aCash dividends were paid at the rate of $1 per share in fiscal year 2017 and $2 per share in fiscal year 2018.

NASH CORPORATION

INCOME STATEMENT

FOR THE FISCAL YEARS ENDED MARCH 31

2018

2017

Sales revenue

$3,010,800

$2,721,120Cost of goods sold^a

1,535,270

1,423,060Gross margin

1,475,530

1,298,060Operating expenses

856,650

783,860Income before income taxes

618,880

514,200Income taxes (40%)

247,552

205,680Net income

$371,328

$308,520

^aDepreciation charges on the plant and equipment of $100,510 and $101,910 for fiscal years ended March 31, 2017 and 2018, respectively, are included in cost of goods sold.

(a) Compute the following items for Nash Corporation. (Round answer to 2 decimal places, e.g. 2.25 or 2.25%.)

(1)

Current ratio for fiscal years 2017 and 2018.

(2)

Acid-test (quick) ratio for fiscal years 2017 and 2018.

(3)

Inventory turnover for fiscal year 2018.

(4)

Return on assets for fiscal years 2017 and 2018. (Assume total assets were $1,672,570 at 3/31/16.)

(5)

Percentage change in sales, cost of goods sold, gross margin, and net income after taxes from fiscal year 2017 to 2018.

2017

2018

(1)

Current ratio

:1

:1(2)

Acid-test (quick) ratio

:1

:1(3)

Inventory turnover

times(4)

Return on assets

%

%

(5)

Percent Changes

Percent Increase

Sales revenue

%

Cost of goods sold

%

Gross margin

%

Net income after taxes

%