P14-3 Perform ratio analysis and evaluate financial position and operating results
Condensed balance sheet and income statement data for Landwehr Corporation appear
below and on page 644.
	LANDWEHR CORPORATION
	Balance Sheets
	December 31
				2018		2017		2016
	Cash			25,000		20,000		18,000
	Accounts receivable (net)	50,000		45,000		48,000
	Other current assets	90,000		95,000		64,000
	Investments		75,000		70,000		45,000
	Plant and equipment (net)	400,000		370,000		358,000
				640,000		600,000		533,000
	Current liabilities		75,000		80,000		70,000
	Long-term debt		80,000		85,000		50,000
	Common stock, $10 par	340,000		310,000		300,000
	Retained earnings	145,000		125,000		113,000
				640,000		600,000		533,000
	LANDWEHR CORPORATION
	Income Statement
	For the Years Ended December 31
						2018		2017
	Sales revenue				$740,000		$700,000
	Less: Sales returns and allowances			40,000		50,000
	Net sales				700,000		650,000
	Cost of goods sold			420,000		400,000
	Gross profit				280,000		250,000
	Operating expenses (including income taxes)			235,000		220,000
	Net income				$45,000		$30,000
	P14-3 Perform ratio analysis and evaluate financial position and operating results
	Condensed balance sheet and income statement data for Landwehr Corporation appear
	below and on page 644.
		LANDWEHR CORPORATION
Instructions		Balance Sheets
(a)		December 31
					2018		2017		2016
		Cash			25,000		20,000		18,000
		Accounts receivable (net)	50,000		45,000		48,000
		Other current assets	90,000		95,000		64,000
		Investments		75,000		70,000		45,000
		Plant and equipment (net)	400,000		370,000		358,000
					640,000		600,000		533,000
(b)
		Current liabilities		75,000		80,000		70,000
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .		Long-term debt		80,000		85,000		50,000
		Common stock, $10 par	340,000		310,000		300,000
		Retained earnings	145,000		125,000		113,000
					640,000		600,000		533,000
		LANDWEHR CORPORATION
		Income Statement
		For the Years Ended December 31
							2018		2017
		Sales revenue				$740,000		$700,000
		Less: Sales returns and allowances			40,000		50,000
		Net sales				700,000		650,000
		Cost of goods sold			420,000		400,000
		Gross profit				280,000		250,000
		Operating expenses (including income taxes)			235,000		220,000
		Net income				$45,000		$30,000
		Additional information:
		1. The market price of Landwehr's common stock was $4.00, $5.00, and $8.00 for
		2016, 2017 and 2018, respectively.
		2. All dividends are 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 Corporation.
	NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .