P15-26A Comparative financial statement data of Danfield, Inc., follow:

Comparative financial statement data of Danfield, Inc., follow:Danfield, Inc.Comparative Income StatementYears Ended December 31, 2012 and 201120122011Net sales467,000428,000Cost of goods sold237,000218,000Gross profit230,000210,000Operating expenses136,000134,000Income from operations94,00076,000Interest expense9,00010,000Income before income tax85,00066,000Income tax expense24,00027,000Net income61,00039,000 Danfield, Inc. Comparative Balance Sheet Years Ended December 31, 2012 and 201120122011 2010* Current assets: Cash 97,000 95,000 Current receivables, net 112,000 118,000 102,000 Inventories 145,000 163,000 203,000 Prepaid expenses 12,000 5,000 Total current assets 366,000 381,000 Property, plant, and equipment, net 211,000 179,000 Total assets 577,000 560,000 598,000 Total 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 amounts1. 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 to sell inventory improved or deteriorated during 2012 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.

 

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