E15-18 p15-26a financial statement analysis

E15-18 P15-26A Financial Statement Analysis Financial Statement AnalysisFrom Chapter 15, complete E15-18 and P15-26A and post the answers to the discussion board by day 3. Respond to at least two of your classmates’ postings. E15-18Large Land Photo Shop has asked you to determine whether the company’s ability to pay current liabilities and total liabilities improved or deteriorated during 2012. To answer this question, you gather the following data:  2012 2011Cash $58,000 $57,000Short-term investments 31,000  Net receivables 110,000 132,000Inventory 247,000 297,000Total assets 585,000 535,000Total current liabilities 255,000 222,000Long-term note payable 46,000 48,000Income from operations 180,000 153,000Interest expense 52,000 39,0001.   Compute the following ratios for 2012 and 2011:a.   Current ratiob.   Acid-test ratioc.   Debt to equity ratio P15-26A Using ratios to evaluate a stock investmentComparative financial statement data of Danfield, Inc., follow:Danfield, Inc.Comparative Income StatementYears Ended December 31, 2012 and 2011  2012 2011  Net sales $467,000 $428,000  Cost of goods sold 237,000 218,000  Gross profit $230,000 $210,000  Operating expenses 136,000 134,000  Income from operations $94,000 $76,000  Interest expense 9,000 10,000  Income before income tax $85,000 $66,000  Income tax expense 24,000 27,000  Net income $61,000 $39,000    Danfield, Inc.Comparative Income StatementYears Ended December 31, 2012 and 2011  2012 2011 2010*Current assets:      Cash $97,000 $95,000  Current receivables, net 112,000 118,000 $102,000Inventories 145,000 163,000 203,000Prepaid expenses 12,000 5,000  Total current assets $366,000 $381,000  Property, plant, and equipment, net 211,000 179,000  Total assets 577,000 $560,000 598,000Total current liabilities $225,000 $246,000  Long-term liabilities 114,000 97,000  Total liabilities $339,000 $343,000  Preferred stock, 3% 108,000 108,000  Common stockholders’ equity, no par 130,000 109,000  Total liabilities and stockholders’ equity $577,000 $560,000  * Selected 2010 amounts 1. Market price of Danfield’s common stock: $86.58 at December 31, 2012 and $46.54 at December 31, 2011.2. Common shares outstanding: 12,000 during 2012 and 10,000 during 2011 and 2010.3. All sales on credit. Requirements1.   Compute the following ratios for 2012 and 2011:a.   Current ratiob.   Times-interest-earned ratioc.   Inventory turnoverd.   Gross profit percentagee.   Debt to equity ratiof.    Rate of return on common stockholders’ equityg.   Earnings per share of common stockh.   Price/earnings ratio  2.   Decide (a) whether Danfield’s ability to pay debts and sell inventory improved or deteriorated during 2012 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.