Other information:

The market price of Lannister common stock was $102.17 on December 31, 2016; and $77.01 on December 31, 2015.

Common shares outstanding: 18,000 during 2016 and 17,500 during 2015.

All sales on credit.

1.    Compute the following ratios for 2016 and 2015:

·      Current ratio.

·      Quick ratio (acid test).

·      Receivables turnover and days' sales outstanding (rounded to the nearest whole day).

·      Inventory turnover and days inventory outstanding (rounded to the nearest whole day).

·      Accounts payable turnover and days' payable outstanding (rounded to the nearest whole day).

·      Cash conversion cycle (in days).

·      Times-interest-earned ratio.

·      Return on assets (use DuPont analysis).

·      Return on common shareholders' equity (use DuPont analysis).

·      Earnings per share of common stock.

·      Price/earnings ratio.

2.    Decide whether (a) Lannister's financial position improved or deteriorated during 2014 and (b) the investment attractiveness of Lannister's common stock appears to have increased or decreased.

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Comparative financial statement data of Lannister Inc. are as follows: Net sales Cost of goods sold Gross profit Lannister Inc. Comparative Income Statement Years Ended December 31, 2016 and 2015 2016 Operating expenses Income from operations Interest expense Income before income tax Income tax expense Net income Current assets: Cash Current receivables, net Inventories Prepaid expenses Total current assets Property, plant and equipment, net Total assets Accounts payable Other current liabilities Total current liabilities Long-term liabilities Total liabilities Common shareholders' equity, no par Total liabilities and shareholders' equity $687,000 375,000 312,000 129,000 183,000 37,000 146,000 36,000 $110,000 Lannister Inc. Comparative Balance Sheet December 31, 2016 and 2015 2016 $45,000 212,000 297,000 4,000 558,000 285,000 $843,000 150,000 135,000 $285,000 243,000 528,000 315,000 $843,000 2015 $49,000 158,000 281,000 29,000 517,000 277,000 $794,000 105,000 188,000 $293,000 231,000 524,000 270,000 $794,000 2015 $595,000 276,000 319,000 142,000 177,000 45,000 132,000 51,000 $81,000 2014 $200,000 181,000 $700,000 112,000 199,000 Comparative financial statement data of Lannister Inc. are as follows: Net sales Cost of goods sold Gross profit Lannister Inc. Comparative Income Statement Years Ended December 31, 2016 and 2015 2016 Operating expenses Income from operations Interest expense Income before income tax Income tax expense Net income Current assets: Cash Current receivables, net Inventories Prepaid expenses Total current assets Property, plant and equipment, net Total assets Accounts payable Other current liabilities Total current liabilities Long-term liabilities Total liabilities Common shareholders' equity, no par Total liabilities and shareholders' equity $687,000 375,000 312,000 129,000 183,000 37,000 146,000 36,000 $110,000 Lannister Inc. Comparative Balance Sheet December 31, 2016 and 2015 2016 $45,000 212,000 297,000 4,000 558,000 285,000 $843,000 150,000 135,000 $285,000 243,000 528,000 315,000 $843,000 2015 $49,000 158,000 281,000 29,000 517,000 277,000 $794,000 105,000 188,000 $293,000 231,000 524,000 270,000 $794,000 2015 $595,000 276,000 319,000 142,000 177,000 45,000 132,000 51,000 $81,000 2014 $200,000 181,000 $700,000 112,000 199,000

Answer rating: 100% (QA)

Solution Here are the ratios for 2016 and 2015 2016 Ratios Current ratio 558000135000 413 Quick ratio 558000 Inventories135000 261000135000 193 Receiv... View the full answer