Ratios from Comparative and Common-Size Data Consider the following financial statements for Waverly Company. During 2013, 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, 2013	Dec. 31, 2012
Assets
Cash and cash equivalents	$22,000	$16,000
Accounts receivable (net)	59,000	47,000
Inventory	124,000	109,000
Prepaid expenses	20,000	14,000
Plant and other assets (net)	471,000	411,000
Total Assets	$696,000	$597,000
Liabilities and Stockholders' Equity
Current liabilities	$90,000	$82,000
10% Bonds payable	225,000	160,000
9% Preferred stock, $50 Par Value	79,000	79,000
Common stock, $10 Par Value	204,000	204,000
Retained earnings	98,000	72,000
Total Liabilities and Stockholders' Equity	$696,000	$597,000

WAVERLY COMPANY Income Statements (Thousands of Dollars)
	2013	2012
Sales revenue	$824,000	$682,000
Cost of goods sold	545,200	437,920
Gross profit on sales	278,800	244,080
Selling and administrative expenses	171,400	149,200
Income before interest expense and income taxes	107,400	94,880
Interest expense	26,500	20,000
Income before income taxes	80,900	74,880
Income tax expense	26,900	25,300
Net income	$54,000	$49,580
Other financial data (thousands of dollars)
Cash provided by operating activities	$65,200	$60,500
Preferred stock dividends	6,750	6,750

Required a. Calculate the following for each year: current ratio, quick ratio, operating-cash-flow-to-current liabilities ratio (current liabilities were $78,000,000 at January 1, 2012), inventory turnover (inventory was $87,000,000 at January 1, 2012), debt-to-equity ratio, times-interest-earned ratio, return on assets (total assets were $493,000,000 at January 1, 2012), and return on common stockholders' equity (common stockholders' equity was $236,000,000 at January 1, 2012). b. Calculate common-size percentages for each year's income statement. Round answers to two decimal places.

	2013	2012
Current ratio:	Answer	Answer
Quick ratio:	Answer	Answer
Operating-cash-flow-to-current-liabilities ratio:	Answer	Answer
Inventory turnover:	Answer	Answer
Debt-to-equity ratio:	Answer	Answer
Times-interest-earned ratio:	Answer	Answer
Return on assets:	Answer	Answer
Return on common stockholders' equity:	Answer	Answer

Round answers to one decimal place.

Income Statements
	Year Ended 2013	Common- Size	Year Ended 2012	Common- Size
Sales revenue	$824,000	Answer	$682,000	Answer
Cost of goods sold	545,200	Answer	437,920	Answer
Gross profit on sales	278,800	Answer	244,080	Answer
Selling and administrative expenses	171,400	Answer	149,200	Answer
Income before interest expense and income taxes	107,400	Answer	94,880	Answer
Interest expense	26,500	Answer	20,000	Answer
Income before income taxes	80,900	Answer	74,880	Answer
Income tax expense	26,900	Answer	25,300	Answer
Net income	$54,000	Answer	$49,580	Answer