Question 4

Comparative financial statement data of Lannister Inc. are as follows:

BUSI 1043 INTRODUCTION TO FINANCIAL ACCOUNTING 21

Lannister Inc.

Comparative Income Statement Years Ended December 31, 2016 and 2015

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2016

2015

Net sales

Cost of goods sold

Gross profit

Operating expenses Income from operations Interest expense

Income before income tax Income tax expense

Net income

Current assets: Cash

Current receivables, net Inventories

Prepaid expenses

Total current assets

Property, plant and equipment, net Total assets

Accounts payable

Other current liabilities

Total current liabilities

Long-term liabilities

Total liabilities

Common shareholders equity, no par Total liabilities and shareholders equity

Other information:

$687,000 375,000 312,000 129,000 183,000 37,000 146,000 36,000 $110,000

Lannister Inc. Comparative Balance Sheet December 31, 2016 and 2015

$45,000 $49,000 212,000 158,000 297,000 281,000 4,000 29,000 558,000 517,000 285,000 277,000 $843,000 $794,000 150,000 105,000 135,000 188,000 $285,000 $293,000 243,000 231,000 528,000 524,000 315,000 270,000 $843,000 $794,000

$595,000 276,000 319,000 142,000 177,000 45,000 132,000 51,000 $81,000

$200,000 181,000

$700,000 112,000

199,000

2016

2015

2014

Market price of Lannister common stock: $102.17 at December 31, 2016; and $77.01 at December 31, 2015.

Common shares outstanding: 18,000 during 2016 and 17,500 during 2015. All sales on credit.

1.

Compute the following ratios for 2016 and 2015:

Current ratio.

Quick ratio (acid test).

Receivables turnover and days sales outstanding (rounded to the nearest whole day). Inventory turnover and days inventory outstanding (rounded to the nearest whole day). Accounts payable turnover and days payable outstanding (rounded to the nearest whole day).