Problem 18-3A Condensed balance sheet and income statement data for Landwehr Cor
ID: 2556268 • Letter: P
Question
Problem 18-3A Condensed balance sheet and income statement data for Landwehr Corporation appear below. LANDWEHR CORPORATION Balance Sheets 2018 2017 2016 Cash $ 25,400 50,500 89,000 75,800 399,000 16,000 17,700 47,200 64,100 45,000 357,600 Accounts receivable 45,600 95,200 69,700 369,400 $639,700 $595,900 $531,600 $80,600 85,100 313,000 117,200 $639,700 $595,900 $531,600 net Other current assets Investments Plant and equipment net Current liabilities $75,100 80,000 338,000 $70,600 49,600 297,000 114,400 Long-term debt n stock, $10 ommo par Retained earnings 146,600 LANDWEHR CORPORATION Income Statement For the Years Ended December 31 2018 2017 Sales revenue Less: Sales returns and allowances Net sales Cost of goods sold Gross profit Operating expenses (including income taxes) 212,500 Net income $740,500 $705,300 39,900 49,500 700,600 655,800 423,500 396,500 277,100 259,300 215,500 64,600 $ 43,8 Additional information: 1. The market price of Landwehr's common stock was $3.00, $6.00, and $8.00 for 2016, 2017, and 2018, respectively 2. All dividends were paid in cash Compute the following ratios for 2017 and 2018. (Round Earnings per share to 2 decimal places, e.g. 1.65, and all other answers to 1 decimal place, e 6.8 or 6.8%.) 2017 2018 (1) Profit margin (2) Asset turnover (3) Earnings per share. (Weighted-average common shares in 2018 were 31,800 and in 2017 were 29,600.) (4) Price-earnings ratio (5) Payout ratio (6) Debt to assets ratio times times times timesExplanation / Answer
2018 2017 1) Profit margin = Net income / Sales 8.73% 6.21 2018: 64600/ 740500 *100 2017: 43800 / 705300*100 (2) Asset turnover = Sales / Average total assets 1.2 times 1.25 times 2018: 740500/ [ (595900+639700)/ 2] 2017: 705300 / [(595900+531600)/2} (3) Earning per share ($) = Net income / Average Number of shares outstanding $1.98 $1.44 2018: 64600 / [ (313000 + 338000)/ 10] / 2 2017: 43800/ [(297000 + 313000) / 10] / 2 (4) Price-earnings = Market price of share / EPS 4.04 times 4.17 times 2018: (8 / 1.98) 2017: (6 / 1.44)