Below are income statements and balance sheets for the Peyton Company for 2019 and 2018:

Required 

Calculate the following ratios for the Peyton Company for 2019 and 2018 and discuss your findings:
1. Profitability

a. Return on sales

b. Return on common stockholders' equity (common stockholders' equity was \(\$ 2,000\) on December 31, 2017)
2. Liquidity

a. Current ratio

b. Accounts receivable turnover (accounts receivable was \(\$ 780\) on December 31,2017 )

c. Inventory turnover (inventory was \(\$ 620\) on December 31,2017 )
3. Solvency

a. Debt-to-equity ratio

b. Times-interest-earned ratio

Transcribed Image Text:

PEYTON COMPANY Income Statement For the Years Ended December 31, 2019 and 2018 (in millions) Sales revenue.... Cost of goods sold. Gross profit...... Selling and administrative expenses Income from operations. Interest expense.... Income before income taxes Income tax expense. Net income... 2019 2018 $10,000 $9,500 5,500 5,200 4,500 4,300 2,800 2,700 1,700 1,600 300 250 1,400 1,350 420 400 980 $ 950