Problem 24-3 Your answer is incorrect. Try again. Pharoah Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Pharoah and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2018, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,960 notes, which are due on June 30, 2018, and September 30, 2018. Another note of $6,030 is due on March 31, 2019, but he expects no difficulty in paying this note on its due date. Brown explained that Pharoah's cash flow problems are due primarily to the company's desire to finance a $299,210 plant expansion over the next 2 fiscal years through internally generated funds The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years PHAROAH CORPORATION BALANCE SHEET MARCH 31 Assets Cash Notes receivable Accounts receivable (net) Inventories (at cost) Plant & equipment (net of depreciation) 2018 $18,280 147,800 131,830 103,960 1,441,730 $1,843,600 $12,630 132,850 124,830 50,250 1,408,680 $1,729,240 Total assets Accounts payable Notes payable Accrued liabilities Common stock (130,000 shares, $10 par) Retained earnings $78,440 75,590 12,090 1,312,780 364,700 $1,843,600 91,050 62,110 6,630 1,304,780 264,670 $1,729240 Total liabilities and stockholders' equity Cash dividends were paid at the rate of $1 per share in fiscal year 2017 and $2 per share in fiscal year 2018. PHAROAH CORPORATION INCOME STATEMENT FOR THE FISCAL YEARS ENDED MARCH 31 2018 2017 Sales revenue Cost of goods sold Gross margin Operating expenses Income before income taxes Income taxes (40%) Net income $3,014,860 1,543,140 1471,720 961,510 610,210 244,084 3366,126 $2,692,590 1437,230 1,255,360 774,820 480,540 192,216 $288,324 Depreciation charges on the plant and equipment of $100,890 and $103,120 for fiscal years ended March 31, 2017 and 2018, respectively, are included in cost of goods sold (a) Compute the following items for Pharoah Corporation. (Round answer to 2 decimal places, eg. 2.25 or 2.25%) (1) Current ratio for fiscal years 2017 (2) Acid-test (quick) ratio for fiscal (3) Inventory turnover for fiscal year 2018 (4) Retum on assets for fiscal years 2017 and 2018. (Assume total assets were $1,677,350 at 3/31/16) (5) Percentage change in sales, cost of goods sold, gross margin, and net income after taxes from fiscal year 2017 to 2018 and 2018 years 2017 and 2018. I 2017 2018 (1Crnt ratio (2) Acid-test (quick) ratio (3) Inventory turnover times (4) Retum on assets (5) Percent Changes Percent Increase Sales revenue Cost of goods sold Gross margin Net income after taxes