Condensed balance sheet and income statement data for Clarence Corporation appear below and on page 696.

Additional information:
1. The market price of Clarence's common stock was $4.00, $5.00, and $8.00 for 2012, 2013, and 2014, respectively.
2. All dividends were paid in cash.
Instructions
(a) Compute the following ratios for 2013 and 2014.
(1) Profit margin.
(2) Asset turnover.
(3) Earnings per share. (Weighted-average common shares in 2014 were 32,000 and in 2013 were 31,000.)
(4) Price-earnings.
(5) Payout.
(6) Debt to total assets.
(b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2013 to 2014 of ClarenceCorporation.

Transcribed Image Text:

December 31 Receivables (net) Investments Plant and equipment (net) 5 1 Current liabilities Long-term debt Common stock, $10 par Retained earnings Clarence Corporation Income Statement For the Years Ended December 31 Less: Sales returns and allowances Net sales Cost of goods sold 420,000 Operating expenses (including income taxes) Net income