Problem 24-3 Marigold 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 Marigold 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 $35,310 notes, which are due on June 30, 2018, and September 30, 2018. Another note of $6,030 is due on March 31, 2019, but he expects no difficulty in paying this note on its due date. Brown explained that Marigold's cash flow problems are due primarily to the company's desire to finance a $299,020 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. MARIGOLD CORPORATION BALANCE SHEET MARCH 31 Assets 2018 2017 Cash Notes receivable Accounts receivable (net) Inventories (at cost) Plant & equipment (net of depreciation) $18,380 149,450 133,000 104,050 1,456,620 $1,861,500 $12,510 131,550 126,430 50,100 1,424,470 $1,745,060 Total assets Liabilities and Owners' Equity. Accounts payable Notes payable Accrued liabilities Common stock (130,000 shares, $10 par) Retained earningsa $79,010 76,120 30,870 1,289,630 385,870 $90,820 61,020 11,220 1,302,000 280,000 Retained earningsa Total liabilities and stockholders' equity 385,870 $1,861,500 280,000 $1,745,060 Cash dividends were paid at the rate of $1 per share in fiscal year 2017 and $2 per share in fiscal year 2018. MARIGOLD CORPORATION INCOME STATEMENT FOR THE FISCAL YEARS ENDED MARCH 31 2018 Sales revenue $2,978,530 Cost of goods solda 1,534,780 Gross margin 1,443,750 Operating expenses 864,870 Income before income taxes 578,880 Income taxes (40%) 231,552 Net income $347,328 2017 $2,723,850 1,411,590 1,312,260 784,140 528,120 211,248 $316,872 Depreciation charges on the plant and equipment of $99,930 and $103,250 for fiscal years ended March 31, 2017 and 2018, respectively, are included in cost of goods sold. (a) Compute the following items for Marigold 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 $1,675,840 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 (2) Acid-test (quick) ratio (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 Click if you would like to Show Work for this question: Open Show Work
