Comparative financial statement data of Arch Optical Mart follow:

Other information:

1. Market price of Arch common stock: $88.17 at December 31, 2016, and $77.01 at December 31, 2015

2. Common shares outstanding: 18,000 during 2016 and 17,800 during 2015

3. All sales on credit

Requirements

1. Compute the following ratios for 2016 and 2015:

a. Current ratio

b. Quick (acid-test) ratio

c. Receivables turnover and days' sales outstanding (DSO); round to nearest whole day

d. Inventory turnover and days' inventory outstanding (DIO); round to nearest whole day

e. Accounts payable turnover and days' payable outstanding (DPO); use cost of goods sold in the turnover ratio and round DPO to nearest whole day

f. Cash conversion cycle (in days)

g. T imes-interest-earned ratio

h. Return on assets; use DuPont Analysis

i.    Return on common stockholders' equity; use DuPont Analysis

j. Earnings per share of common stock

k. Price-earnings ratio

2. Decide whether (a) Arch's financial position improved or deteriorated during 2016 and (b) whether the investment attractiveness of Arch's common stock appears to have increased or decreased.

3. How will what you learned in this problem help you evaluate an investment?

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A1 Arch Optical Mart Comparative Income Statements Years Ended December 31, 2016 and 2015 2016 2015 3 Net sales 4Cost of goods sold $ 957,000 75,000 875000 576,000 Gross profit 6ー|Operating expenses 7Income from operations 8 Interest expense 9 Income before income tax 142000 157,000 45.000 10 Income tax expense 11 Net income 73,000 Al Arch Optical Mart Comparative Balance Sheets December 31, 2016 and 2015 2016 2015 20152014 3 Current assets: 4Cas 5 Current receivables, net 6 Inventories 45,000 217,000 158,000 $200,000 49000 302,000 286,000 181000 expenses 29,000 Total current assets Property, plant, and equipment, net 10 Total assets 568,000 522,000 285.000 277.000 53,000$799,000 700,000 2 Accounts payable 13 Other current liabilities 14 Total current liabilities 15 Long-term liabilities $160,000 $110,000 112,000 35,000 188,000 295,000298,000 29.000 Total Liabilities 17 Common stockholders equity,no pa 18 Total liabilities and stockholders' equity 538,000 315,000270,000199,000 853,000 $799000