$698$

$14$ Financial Statement Analysis

Instructions

$($a$)$ Prepare a vertical analysis of the $2017$ income statement data for Farris Company and

Ratzlaff Company in columnar form. return on assets and the return on profitability of the companies by computing the P$14-2$ The comparative statements of Painter Tool Company are presented below.

Compute ratios from balance $(202)$

Instructions

$57,000.$

$($a$)$ Earnings per share

$($b$)$ Return on commo

$($d$)$ Current ratio.

$($e$)$ Acid$-$test ratio.

$($f$)$ Accounts receivable turnover

$($g$)$ Inventory turnover.

$($h$)$ Times interest earned.

$($i$)$ Asset turnover.

P$14-3$ Condensed balance sheet and income statement data for Landwehr Corporation appear below.

LANDWEHR CORPORATION Income Statement

For the Years Ended December $31$

Sales revenue

Less: Sales returns and allowances

Net sales

Cost of goods sold

Gross profit

Operating exper

Additional information:

The market price of Landwehr's common stock was $$4\mathrm{.}00,$$$5\mathrm{.}00,$ and $$8\mathrm{.}00$ for $2016,2017,$ and $2018,$ respectively.

All dividends were paid in cash.

Instructions

$($a$)$ Compute the following ratios for $2017$ and $2018.$

$(1)$ Profit margin.

$(2)$ Asset turnover.

$(3)$ Earnings per share. $($Weighted$-$average common shares in $2018$ were $32,000$ and in $2017$ 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 $2017$ to $2018$ of Landwehr