Question

Problem 18-3A

Condensed balance sheet and income statement data for Landwehr Corporation appear below.

LANDWEHR CORPORATION Balance Sheets December 31
		2018			2017			2016
Cash		$ 25,800			$ 17,600			$ 18,700
Accounts receivable (net)		50,500			44,200			47,100
Other current assets		89,600			94,900			63,900
Investments		75,300			71,000			45,100
Plant and equipment (net)		400,500			370,000			358,500
		$641,700			$597,700			$533,300
Current liabilities		$75,500			$79,800			$69,400
Long-term debt		79,300			84,100			50,300
Common stock, $10 par		368,000			316,000			304,000
Retained earnings		118,900			117,800			109,600
		$641,700			$597,700			$533,300

LANDWEHR CORPORATION Income Statement For the Years Ended December 31
		2018			2017
Sales revenue		$738,000			$705,500
Less: Sales returns and allowances		39,100			49,900
Net sales		698,900			655,600
Cost of goods sold		417,000			400,000
Gross profit		281,900			255,600
Operating expenses (including income taxes)		212,500			223,000
Net income		$ 69,400			$ 32,600

Additional information:

1.		The market price of Landwehr’s common stock was $3.00, $6.00, and $7.00 for 2016, 2017, and 2018, respectively.
2.		All dividends were paid in cash.

(a)

Compute the following ratios for 2017 and 2018. (Round Earnings per share to 2 decimal places, e.g. 1.65, and all other answers to 1 decimal place, e.g. 6.8 or 6.8%.)

				2017			2018
(1)		Profit margin			%			%
(2)		Asset turnover			times			times
(3)		Earnings per share. (Weighted-average common shares in 2018 were 31,800 and in 2017 were 32,900.)		$			$
(4)		Price-earnings ratio			times			times
(5)		Payout ratio			%			%
(6)		Debt to assets ratio			%			%

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Answer 1