Use the following comparative income statement form to enter amounts you identify from the computations on the Liquidity and Solvency Measures panel and on the Profitability Measures panel. Compute any missing amounts and complete the horizontal analysis columns. Enter percentages as decimal amounts, rounded to one decimal place. When rounding, look only at the figure to the right of one decimal place. If < 5, round down and if 5, round up. For example, for 32.048% enter 32.0%. For 32.058% enter 32.1%.

Comparative Income Statement

For the Years Ended December 31, 20Y6 and 20Y5

1		20Y6	20Y5	Amount Increase (Decrease)	Percentage Increase (Decrease)
2	Sales		$7,257,000.00
3	Cost of goods sold		3,444,000.00
4	Gross profit		$3,813,000.00
5	Selling expenses		$1,451,000.00
6	Administrative expenses	1,237,500.00	1,101,500.00
7	Total operating expenses		$2,552,500.00
8	Income from operations		$1,260,500.00
9	Interest expense		120,600.00
10	Income before income tax		$1,139,900.00
11	Income tax expense		178,200.00
12	Net income		$961,700.00

Profitability Measures	Computations
Asset turnover	$8,250,000 [($6,609,000 + $6,419,000) 2]
Return on total assets	($786,300 + $127,000) [($6,609,000 + $6,419,000) 2]
Return on stockholders equity	$786,300 [($4,079,000 + $3,875,050) 2]
Return on common stockholders equity	($786,300 $65,000) [($3,591,500 + $3,447,840) 2]
Earnings per share on common stock	($786,300 $65,000) 250,000 shares
Price-earnings ratio	$35 $3.05
Dividends per share	$175,000 250,000 shares
Dividend yield	$0.70 $35

Liquidity and Solvency Measures	Computations
Inventory turnover	$8,250,000 [($714,000 + $740,000) 2]
Quick ratio	$1,866,000 $840,000
Number of days' sales in inventory	[($714,000 + $740,000) 2] ($8,250,000 365)
Ratio of liabilities to stockholders' equity	$2,530,000 $4,079,000
Ratio of fixed assets to long-term liabilities	$2,690,000 $1,690,000
Times interest earned	($970,500 + $127,000) $127,000
Working capital	$3,095,000 $840,000
Current ratio	$3,095,000 $840,000
Number of days' sales in receivables	[($1,072,000 + $1,100,000) 2] ($4,100,000 365)
Accounts receivable turnover	$4,100,000 [($1,072,000 + $1,100,000) 2]