Purple Power Company
Comparative Balance Sheet
For the Year Ended December 31 2018 and 2017
	2018	2017
Assets
Current assets:
Cash	$960,000	$1,260,000
Marketable securities	$0	$300,000
Accounts receivable, net	$2,700,000	$1,800,000
Inventory	$3,900,000	$2,400,000
Prepaid expenses	$240,000	$180,000
Total current assets	$7,800,000	$5,940,000
Plant and equipment, net	$9,300,000	$8,940,000
Total assets	$17,100,000	$14,880,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$3,900,000	$2,760,000
Note payable, 10%	$3,600,000	$3,000,000
Total liabilities	$7,500,000	$5,760,000
Stockholders' equity:
Common stock, $78 par value	$7,800,000	$7,800,000
Retained earnings	$1,800,000	$1,320,000
Total stockholders' equity	$9,600,000	$9,120,000
Total liabilities and stockholders' equity	$17,100,000	$14,880,000
Purple Power Company
Comparative Income Statement and Reconciliation
For the Year Ended December 31 2018 and 2017
	2018	2017
Sales (all on account)	$15,750,000	$12,480,000
Cost of goods sold	$12,600,000	$9,900,000
Gross margin	$3,150,000	$2,580,000
Selling and administrative expenses	$1,590,000	$1,560,000
Net operating income	$1,560,000	$1,020,000
Interest expense	$360,000	$300,000
Net income before taxes	$1,200,000	$720,000
Income taxes (30%)	$360,000	$216,000
Net income	$840,000	$504,000
Common dividends	$360,000	$252,000
Net income	$840,000	$504,000
Beginning retained earnings	$1,320,000	$1,068,000
Ending retained earnings	$1,800,000	$1,320,000
	Purple Power In Class Assignment
	PART TWO	This Year	Last Year
a.	The times interest earned ratio.
b.	The debt-to-equity ratio.
c.	The gross margin percentage.
d.	The return on total assets. (Total assets at the beginning of last year were $12,960,000.)
e.	The return on equity. (Stockholders equity at the beginning of last year totaled $9,048,000. There has been no change in common stock over the last two years.)
f.	Is the companys financial leverage positive or negative?*
	PART THREE	This Year	Last Year
a.	The earnings per share.
b.	The dividend yield ratio.
c.	The dividend payout ratio.
d.	The price-earnings ratio.
e.	The book value per share of common stock.
	PART FOUR	This Year	Last Year
a.	Working capital.
b.	The current ratio.
c.	The acid-test ratio.
d.	The average collection period. (The accounts receivable at the beginning of last year totaled $1,560,000.)
e.	The average sale period. (The inventory at the beginning of last year totaled $1,920,000.)
f.	The operating cycle.
g.	The total asset turnover. (The total assets at the beginning of last year totaled $14,500,000.)
	* Leverage is positive if the return on equity is greater than the return on assets.