Problem 24 3 Metlock 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 Metlock 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 $34,960 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 Metlocks cash flow problems are due primarily to the companys desire to finance a $299,210 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 METLOCK CORPORATION BALANCE SHEET MARCH 31 Assets 2018 2017 Cash $18,280 $12,630 Notes receivable 147,800 132,850 Accounts receivable (net) 131,830 124,830 Inventories (at cost) 103,960 50,250 Plant equipment (net of depreciation) 1,441,730 1,408,680 Total assets $1,843,600 $1,729,240 Liabilities and Owners Equity Accounts payable $78,440 $91,050 Notes payable 75,590 62,110 Accrued liabilities 12,090 6,630 Common stock (130,000 shares, $10 par) 1,312,780 1,304,780 Retained earnings a 364,700 264,670 Total liabilities and stockholders equity $1,843,600 $1,729,240 a Cash dividends were paid at the rate of $1 per share in fiscal year 2017 and $2 per share in fiscal year 2018 METLOCK CORPORATION INCOME STATEMENT FOR THE FISCAL YEARS ENDED MARCH 31 2018 2017 Sales revenue $3,014,860 $2,692,590 Cost of goods sold a 1,543,140 1,437,230 Gross margin 1,471,720 1,255,360 Operating expenses 861,510 774,820 Income before income taxes 610,210 480,540 Income taxes (40 ) 244,084 192,216 Net income $366,126 $288,324 a Depreciation charges on the plant and equipment of $100,890 and $103,120 for fiscal years ended March 31, 2017 and 2018, respectively, are included in cost of goods sold (a) Compute the following items for Metlock 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 $1,677,350 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

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Problem 24-3 Metlock Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock,

Problem 24-3

Metlock 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 Metlock 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 $34,960 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 Metlocks cash flow problems are due primarily to the companys desire to finance a $299,210 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.

METLOCK CORPORATION BALANCE SHEET MARCH 31
Assets	2018	2017
Cash	$18,280	$12,630
Notes receivable	147,800	132,850
Accounts receivable (net)	131,830	124,830
Inventories (at cost)	103,960	50,250
Plant & equipment (net of depreciation)	1,441,730	1,408,680
Total assets	$1,843,600	$1,729,240

Liabilities and Owners Equity
Accounts payable	$78,440	$91,050
Notes payable	75,590	62,110
Accrued liabilities	12,090	6,630
Common stock (130,000 shares, $10 par)	1,312,780	1,304,780
Retained earnings^a	364,700	264,670
Total liabilities and stockholders equity	$1,843,600	$1,729,240

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

METLOCK CORPORATION INCOME STATEMENT FOR THE FISCAL YEARS ENDED MARCH 31
	2018	2017
Sales revenue	$3,014,860	$2,692,590
Cost of goods sold^a	1,543,140	1,437,230
Gross margin	1,471,720	1,255,360
Operating expenses	861,510	774,820
Income before income taxes	610,210	480,540
Income taxes (40%)	244,084	192,216
Net income	$366,126	$288,324

^aDepreciation charges on the plant and equipment of $100,890 and $103,120 for fiscal years ended March 31, 2017 and 2018, respectively, are included in cost of goods sold.

(a) Compute the following items for Metlock 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 $1,677,350 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.