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The following financial information is for Priscoll Company. PRISCOLL COMPANY Balance Sheets December 31 Assets 2017 2016 Cash $ 70,000 $ 65,000 Debt investments (short-term)

The following financial information is for Priscoll Company.

PRISCOLL COMPANY Balance Sheets December 31

Assets

2017

2016

Cash

$ 70,000

$ 65,000

Debt investments (short-term)

55,000

40,000

Accounts receivable

104,000

90,000

Inventory

230,000

165,000

Prepaid expenses

25,000

23,000

Land

130,000

130,000

Building and equipment (net)

260,000

185,000

Total assets

$874,000

$698,000

Liabilities and Stockholders Equity

Notes payable

$170,000

$120,000

Accounts payable

65,000

52,000

Accrued liabilities

40,000

40,000

Bonds payable, due 2017

250,000

170,000

Common stock, $10 par

200,000

200,000

Retained earnings

149,000

116,000

Total liabilities and stockholders equity

$874,000

$698,000

PRISCOLL COMPANY Income Statements For the Years Ended December 31

2017

2016

Sales revenue

$882,000

$790,000

Cost of goods sold

640,000

575,000

Gross profit

242,000

215,000

Operating expenses

190,000

167,000

Net income

$ 52,000

$ 48,000

Additional information:

1. Inventory at the beginning of 2016 was $115,000.
2. Accounts receivable (net) at the beginning of 2016 were $86,000.
3. Total assets at the beginning of 2016 were $660,000.
4. No common stock transactions occurred during 2016 or 2017.
5. All sales were on account.

Part 1

Part 1

  • Your Answer
  • Correct Answer

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Compute the liquidity and profitability ratios of Priscoll Company for 2016 and 2017. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%. If % change is a decrease show the numbers as negative, e.g. -1.83% or (1.83%).)

2016

2017

% Change

LIQUIDITY

Current ratio

Enter a number

:1

Enter a number

:1

Enter percentages

%
Accounts receivables turnover

Enter a number

times

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times

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%
Inventory turnover

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times

Enter a number

times

Enter percentages

%

2016

2017

% Change

PROFITABILITY

Profit margin

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%

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%

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%
Asset turnover

Enter a number

times

Enter a number

times

Enter percentages

%
Return on assets

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%

Enter percentages

%

Enter percentages

%
Earnings per share

$Enter a dollar amount

$Enter a dollar amount

Enter percentages

%

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Part 2

Part 2

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Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2017, and (2) as of December 31, 2018, after giving effect to the situation. Net income for 2018 was $54,000. Total assets on December 31, 2018, were $900,000. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%. If % change is a decrease show the numbers as negative, e.g. -1.83% or (1.83%).)

Situation

Ratio

1. 18,000 shares of common stock were sold at par on July 1, 2018. Return on common stockholders equity
2. All of the notes payable were paid in 2018. Debt to assets ratio
3. The market price of common stock was $9 and $12 on December 31, 2017 and 2018, respectively. Price-earnings ratio

2017

2018

% Change

Return on common stockholders equity

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%

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%

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%
Debt to assets ratio

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%

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%

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%
Price earnings ratio

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times

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times

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