Prater Company

Statement of Financial Position

December 31, Year 2 and Year 1

(dollars in thousands)

Year 2

Year 1

Current assets:

Cash and marketable securities..........................

$ 140

$ 130

Accounts receivable, net....................................

120

110

Inventory............................................................

100

110

Prepaid expenses................................................

50

40

Total current assets................................................

410

390

Noncurrent assets:

Plant & equipment, net..........................................

1,840

1,830

Total assets............................................................

$2,250

$2,220

Current liabilities:

Accounts payable...............................................

$ 100

$ 100

Accrued liabilities..............................................

80

80

Notes payable, short term...................................

210

230

Total current liabilities..........................................

390

410

Noncurrent liabilities:

Bonds payable....................................................

460

500

Total liabilities......................................................

850

910

Stockholders equity:

Preferred stock, $5 par, 5%................................

100

100

Common stock, $10 par.....................................

200

200

Additional paid-in capital--common stock.........

260

260

Retained earnings...............................................

840

750

Total stockholders equity.....................................

1,400

1,310

Total liabilities & stockholders equity.................

$2,250

$2,220

Prater Company Income Statement For the Year Ended December 31, Year 2 (dollars in thousands)
	Sales (all on account)............................................	$2,000
	Cost of goods sold.................................................	1,400
	Gross margin.........................................................	600
	Operating expenses...............................................	240
	Net operating income............................................	360
	Interest expense.....................................................	50
	Net income before taxes........................................	310
	Income taxes (30%)...............................................	93
	Net income............................................................	$ 217

Dividends during Year 2 totalled $127 thousand, of which $5 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $140.

Compute the following for Year 2:

1. Working capital: ( nearest 2 decimal ) (Hints: XX.XX)

2. Current ratio ( nearest 2 decimal ) (Hints: X.XX)

3. Acid-test (quick) ratio . ( nearest 2 decimal ) (Hints: X.XX)

4. Accounts receivable turnover . ( nearest 2 decimal ) (Hints: XX.XX)

5. Average collection period (age of receivables) . ( nearest 2 decimal ) (Hints: XX.XX)

6 Inventory turnover . ( nearest 2 decimal ) (Hints: XX.XX)

7. Average sale period (turnover in days) days. ( nearest 2 decimal ) (Hints: XX.XX)

8. Times interest earned ( nearest 2 decimal ) (Hints: X.XX)

9. Debt-to-equity ratio ( nearest 2 decimal ) (Hints: X.XX)