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Stargel, Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2017 and 2016 2017 2016 Retained earnings, January 1 5,375,000 4,545,000 Add: net

Stargel, Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2017 and 2016
2017 2016
Retained earnings, January 1 5,375,000 4,545,000
Add: net income 900,000 925,000
Total 6,275,000 5,470,000
Deduct dividends:
On preferred stock 45,000 45,000
On common stock 50,000 50,000
Total 95,000 95,000
Retained earnings, December 31 6,180,000 5,375,000
Stargel, Inc.
Comparative Income Statement
For the Years Ended December 31, 2017 and 2016
2017 2016
Sales (all on account) 10,050,000 9,450,000
Sales returns and allowances 50,000 50,000
Net sales 10,000,000 9,400,000
Cost of goods sold 5,350,000 4,950,000
Gross profit 4,650,000 4,450,000
Selling expenses 2,000,000 1,880,000
Administrative expenses 1,500,000 1,410,000
Total operating expenses 3,500,000 3,290,000
Income from operations 1,150,000 1,160,000
Other income 150,000 140,000
1,300,000 1,300,000
Other expense (interest) 170,000 150,000
Income before income tax 1,130,000 1,150,000
Income tax expense 230,000 225,000
Net income 900,000 925,000
Stargel, Inc.
Comparative Balance Sheet
December 31, 2017 and 2016
Dec. 31, 2017 Dec. 31, 2016
Assets
Current assets:
Cash 500,000 400,000
Marketable securities 1,010,000 1,000,000
Accounts receivable, net 740,000 510,000
Inventories 1,190,000 950,000
Prepaid expenses 250,000 229,000
Total current assets 3,690,000 3,089,000
Long-term investments 2,350,000 2,300,000
Property, plant, and equipment, net 3,740,000 3,366,000
Total assets 9,780,000 8,755,000
Liabilities
Current liabilities 900,000 880,000
Long-term liabilities
Note payable, 8%, due 2020 200,000 -
Bonds payable, 10%, due 2025 1,500,000 1,500,000
Total long-term liabilities 1,700,000 1,500,000
Total liabilities 2,600,000 2,380,000
Stockholders' Equity
Preferred $.90 stock, $10 par 500,000 500,000
Common stock, $5 par 500,000 500,000
Retained earnings 6,180,000 5,375,000
Total stockholders'equtiy 7,180,000 6,375,000
Total liabilities and stockholders' equity 9,780,000 8,755,000

Calculate the following ratios for both years: current ratio, average days to sell inventory (use ending inventory), debt to assets ratio, return on investment (use total assets), gross margin percentage, asset turnover (use ending asset balance), return on sales, and plant assets to long-term debt ratio. Include all formulas and intermediate calculations.

Which year appears to be more profitable,?Which year indicates there is more financial risk? Which year appears to be the more efficient in using assets?

For each question,explain youranswer by indicating what measures you used to reach your conclusion.

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