Problem 24-3

Oriole 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 Oriole 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 $35,290 notes, which are due on June 30, 2018, and September 30, 2018. Another note of $6,050 is due on March 31, 2019, but he expects no difficulty in paying this note on its due date. Brown explained that Orioles cash flow problems are due primarily to the companys desire to finance a $302,830 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.

ORIOLE CORPORATION BALANCE SHEET MARCH 31
Assets		2018		2017
Cash		$18,070		$12,550
Notes receivable		146,560		132,210
Accounts receivable (net)		130,890		124,430
Inventories (at cost)		105,500		49,630
Plant & equipment (net of depreciation)		1,455,450		1,413,000
Total assets		$1,856,470		$1,731,820
Liabilities and Owners Equity
Accounts payable		$79,550		$90,880
Notes payable		75,280		61,070
Accrued liabilities		15,450		4,980
Common stock (130,000 shares, $10 par)		1,301,840		1,311,740
Retained earningsa		384,350		263,150
Total liabilities and stockholders equity		$1,856,470		$1,731,820
aCash dividends were paid at the rate of $1 per share in fiscal year 2017 and $2 per share in fiscal year 2018.

ORIOLE CORPORATION INCOME STATEMENT FOR THE FISCAL YEARS ENDED MARCH 31
		2018		2017
Sales revenue		$2,994,080		$2,725,510
Cost of goods solda		1,518,900		1,438,280
Gross margin		1,475,180		1,287,230
Operating expenses		865,250		782,460
Income before income taxes		609,930		504,770
Income taxes (40%)		243,972		201,908
Net income		$365,958		$302,862
aDepreciation charges on the plant and equipment of $100,600 and $102,130 for fiscal years ended March 31, 2017 and 2018, respectively, are included in cost of goods sold.

(a) Compute the following items for Oriole 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 $1,697,000 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