Ratios from Comparative and Common-Size Data

Consider the following financial statements for Waverly Company.

During 2016, management obtained additional bond financing to enlarge its production facilities. The company faced higher production costs during the year for such things as fuel, materials, and freight. Because of temporary government price controls, a planned price increase on products was delayed several months.

As a holder of both common and preferred stock, you decide to analyze the financial statements:

WAVERLY COMPANY Balance Sheets (Thousands of Dollars)
	Dec. 31, 2016	Dec. 31, 2015
Assets
Cash and cash equivalents	$19,000	$12,000
Accounts receivable (net)	55,000	43,000
Inventory	120,000	105,000
Prepaid expenses	20,000	14,000
Plant and other assets (net)	471,000	411,000
Total Assets	$685,000	$585,000
Liabilities and Stockholders Equity
Current liabilities	$91,000	$82,000
10% Bonds payable	225,000	160,000
9% Preferred stock, $50 Par Value	75,000	75,000
Common stock, $10 Par Value	200,000	200,000
Retained earnings	94,000	68,000
Total Liabilities and Stockholders Equity	$685,000	$585,000

WAVERLY COMPANY Income Statements (Thousands of Dollars)
	2016	2015
Sales revenue	$820,000	$678,000
Cost of goods sold	545,000	433,920
Gross profit on sales	275,000	244,080
Selling and administrative expenses	175,000	149,200
Income before interest expense and income taxes	100,000	94,880
Interest expense	22,500	16,000
Income before income taxes	77,500	78,880
Income tax expense	22,900	21,300
Net income	$54,600	$57,580
Other financial data (thousands of dollars)
Cash provided by operating activities	$65,200	$60,500
Preferred stock dividends	6,750	6,750

b. Calculate common-size percentages for each years income statement.

b. Round answers to one decimal place.

Common-Size Percentages
	2016	2015
Sales revenue	Answer%	Answer%
Cost of goods sold	Answer%	Answer%
Gross profit on sales	Answer%	Answer%
Selling and administrative expenses	Answer%	Answer%
Income before interest expense and income taxes	Answer%	Answer%
Interest expense	Answer%	Answer%
Income before income taxes	Answer%	Answer%
Income tax expense	Answer%	Answer%
Net income	Answer%	Answer%