P$18-2$ The comparative statements of Larker Tool Company are presented below.

LARKER TOOL COMPANY

Income Statement

For the Years Ended December $31$

$20132012$

Net sales $$1,818,500$ $$1,750,500$

Cost of goods sold $1,011,500996,000$

Gross profi t $807,000754,500$

Selling and administrative expense $516,000479,000$

Income from operations $291,000275,500$

Other expenses and losses

Interest expense $18,00014,000$

Income before income taxes $273,000261,500$

Income tax expense $81,00077,000$

Net income $ $192,000$ $ $184,500$

Prepare vertical analysis and

comment on profi tability.

$($SO $4,5)$

Compute ratios from balance

sheet and income statement.

$($SO $5)$

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LARKER TOOL COMPANY

Balance Sheets

December $31$

Assets $20132012$

Current assets

Cash $ $60,100$ $ $64,200$

Short$-$term investments $69,00050,000$

Accounts receivable $($net$)117,800102,800$

Inventory $123,000115,500$

Total current assets $369,900332,500$

Plant assets $($net$)600,300520,300$

Total assets $$970,200$ $$852,800$

Liabilities and Stockholders$$ Equity

Current liabilities

Accounts payable $$160,000$ $$145,400$

Income taxes payable $43,50042,000$

Total current liabilities $203,500187,400$

Bonds payable $200,000200,000$

Total liabilities $403,500387,400$

Stockholders$$ equity

Common stock $($$$5$ par$)280,000300,000$

Retained earnings $286,700165,400$

Total stockholders$$ equity $566,700465,400$

Total liabilities and stockholders$$ equity $$970,200$ $$852,800$

All sales were on account.

Instructions

Compute the following ratios for $2013.($Weighted$-$average common shares in $2013$ were $57,000.)$

$($a$)$ Earnings per share. $($f$)$ Receivables turnover.

$($b$)$ Return on common stockholders$$ equity. $($g$)$ Inventory turnover.

$($c$)$ Return on assets. $($h$)$ Times interest earned.

$($d$)$ Current. $($i$)$ Asset turnover.

$($e$)$ Acid$-$test. $($j$)$ Debt to total asset