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 $19,000 $13,000 Accounts receivable (net) 56,000 44,000 Inventory 121,000 106,000 Prepaid expenses 21,000 14,000 Plant and other assets (net) 471,000 411,000 Total Assets $688,000 $588,000 Liabilities and Stockholders' Equity Current liabilities $91,000 $83,000 10% Bonds payable 226,000 161,000 9% Preferred stock, $50 Par Value 76,000 76,000 Common stock, $10 Par Value 201,000 200,000 Retained earnings 94,000 68,000 Total Liabilities and Stockholders' Equity $688,000 $588,000 WAVERLY COMPANY Income Statements (Thousands of Dollars) 2013 2012 Sales revenue $821,000 $679,000 Cost of goods sold 542,200 434,920 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 22,500 17,000 Income before income taxes 84,900 77,880 Income tax expense 23,900 21,300 Net income $61,000 $56,580 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. a. Round answers to two decimal places. 2013 2012 Current ratio: Answer 0 Answer 0 Quick ratio: Answer 0 Answer 0 Operating-cash-flow-to-current-liabilities ratio: Answer 0 Answer 0 Inventory turnover: Answer 0 Answer 0 Debt-to-equity ratio: Answer 0 Answer 0 Times-interest-earned ratio: Answer 0 Answer 0 Return on assets: Answer 0 % Answer 0 % Return on common stockholders' equity: Answer 0 % Answer 0 % b. Round answers to one decimal place. Common-Size Percentages 2013 2012 Sales revenue Answer 0 % Answer 0 % Cost of goods sold Answer 0 % Answer 0 % Gross profit on sales Answer 0 % Answer 0 % Selling and administrative expenses Answer 0 % Answer 0 % Income before interest expense and income taxes Answer 0 % Answer 0 % Interest expense Answer 0 % Answer 0 % Income before income taxes Answer 0 % Answer 0 % Income tax expense Answer 0 % Answer 0 % Net income Answer 0 % Answer 0 %