Comparative financial statement data of Danfield, Inc., follow:
Danfield, Inc.
Comparative Income Statement
Years 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 Balance Sheet
Years Ended December 31, 2012 and 2011
2012
2011
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 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.
Requirements
1. Compute the following ratios for 2012 and 2011:
a. Current ratio
b. Times-interest-earned ratio
c. Inventory turnover
d. Gross profit percentage
e. Debt to equity ratio
f. Rate of return on common stockholders’ equity
g. Earnings per share of common stock
h. Price/earnings ratio
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