Condensed statement of financial position and income statement data for Clarence Limited appear below.

CLARENCE LIMITED

Statements of Financial Position

December 31

CLARENCE LIMITED
Income Statement
For the Years Ended December 31

Additional information:
1. The market price of Clarence's ordinary shares was £4.00, £5.00, and £7.00 for 2015, 2016, and 2017, respectively.
2. All dividends were paid in cash.
Instructions
(a) Compute the following ratios for 2016 and 2017.
(1) Profit margin.
(2) Asset turnover.
(3) Earnings per share. (Weighted-average ordinary shares in 2017 were 32,000 and in
2016 were 31,000.)
(4) Price-earnings ratio.
(5) Payout ratio.
(6) Debt to assets ratio.
(b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2016 to 2017 of Clarence Limited?

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2017 2016 2015 Plant and equipment (net) Investments Other current assets Accounts receivable (net) Cash £400,000 75,000 90,000 50,000 25,000 £640,000 £370,000 70,000 95,000 45,000 20,000 £600,000 £358,000 45,000 64,000 48,000 18,000 £533,000 Share capital-ordinary, £10 par Retained earnings Non-current liabilities Current liabilities £345,000 145,000 80,000 70,000 £640,000 £315,000 123,000 87,000 75,000 £600,000 £300,000 113,000 50,000 70,000 £533,000 Sales revenue Less: Sales returns and allowances Net sales Cost of goods sold Gross profit Operating expenses (including income taxes) Net income 2017 £740,000 40,000 700,000 420,000 280,000 236,000 £ 44,000 2016 £700,000 60,000 640,000 400,000 240,000 210,000 £ 30,000