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Comparative financial statement data of Manfield, Inc. follow:

Comparative financial statement data of Manfield, Inc. follow: 囲(Click the icon to view the income statement.) EEE (Click the icon to view the balance sheet.) 1 (Click the icon to view the additional financial information.) Read the requirements Requirement 1a. Compute the current ratios for 2018 and 2017. Begin by selecting the formula to compute the current ratio Current ratio =

Manfield, Inc. Comparative Income Statement Years Ended December 31, 2018 and 2017 2018 2017 Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Income From Operations Interest Expense Income Before Income Tax Income Tax Expense Net Income S 465,000 S 423,000 243,000 216,000 222,000 207,000 39,000 137,000 83,000 70,000 14,000 71,000 56,000 21,000 27,000 S 50,000 $ 29,000 12,000

Manfield, Inc. Comparative Balance Sheet December 31, 2018 and 2017 2018 2017 2016* Assets Current Assets Cash Accounts Receivables, Net Merchandise Inventory Prepaid Expenses Total Current Assets S 92,000 S 91,000 114,000 116,000 S 102,000 145,000 15,000 206,000 16,000 10,000 367,000 375,000 173,000 S 581,000 $ 548,000 214,000 Property, Plant, and Equipment, Net Total Assets s600,000 Liabilities Total Current Liabilities Long-term Liabilities Total Liabilities S 230,000 $ 246,000 94,000 344,000 340,000 114,000 Stockholders Equity Preferred Stock, 3% Common Stockholders Equity, no par Total Liabilities and Stockholders Equity 100,000 100,000 137,000 108,000 88,000 S 581,000 $ 548,000 Selected 2016 amounts

1. Market price of Manfields common stock: $89.10 at December 31, 2018, and $37.57 at December 31, 2017. 2. Common shares outstanding: 10,000 on December 31, 2018 and 9,000 on December 31, 2017 and 2016. 3. All sales are on credit.

1. Compute the following ratios for 2018 and 2017 a. Current ratio b. Cash ratio c. Times-interest-earned ratio d. Inventory turnover e. Gross profit percentage f. Debt to equity ratio g. Rate of return on common stockholders equity h. Earnings per share of common stock i. Price/earnings ratio Decide (a) whether Manfields ability to pay debts and to sell inventory improved or deteriorated during 2018 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased. 2.

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Answer:-

Sr.No. Particulars 2018 2017
1(A) Current Ratio:-Current Assets/Current Liabilities 367000/230000 375000/246000
Current Ratio:- 1.596 1.524
1(B) Cash Ratio:-Cash+Cash Equivalents/Current Liabilities 92000/230000 91000/246000
0.4 0.370
1( C) Interest Earned Ratio:-EBIT/Interest Expense 83000/12000 70000/14000
6.92 5
1(D) Inventory Turnover Ratio:-Cost of Goods Sold/Average Inventory 243000/ (158000+145000) 216000/ (158000+206000)
0.802 0.593
1( E) Gross Profit percentage Ratio:-Gross Profit/Sales 222000/465000 207000/423000
0.477 0.489
1(F) Debt to equity Ratio:-Total Debt/Equity 114000/137000 94000/108000
0.832 0.870
1(G) Rate of return on common equity 50000/137000*100 29000/108000*100
36% 27%
1(H) Earning Per share:-Net Income-Preference stock dividend/No of shares (50000-3000)/13700 (29000-3000)/10800
3.431 2.407
1(I) Price earnings ratio=Market price/Eps 89.1/3.43 37.57/2.41
25.977 15.589

2.a The debt equity ratio of Manfield Inc has reduced from 0.87 to 0.83 in 2018.So the ability to pay debts has deteriorated.Inventory turnover ratio has increased from 0.593 to 0.802.So the ability to sell inventory has improved.

2b. The EPS of the company has increased from 2.407 to 3.431 and also the PE ratio has increased from 15.589 to 25.977.So the investment attractiveness has increased.

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