Help please! Problem 14-3A Condensed balance sheet and income statement data for

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Help please!

Problem 14-3A Condensed balance sheet and income statement data for Landwehr Corporation appear below LANDWEHR CORPORATION Balance Sheets December 31 2018 2017 2016 $ 18,800 48,700 64,500 45,500 357,300 $534,800 $69,600 49,000 312,000 104,200 Cash Accounts receivable (net) Other current assets Investments Plant and equipment (net) $25,000 50,900 89,400 74,100 399,100 $638,500 $17,100 45,200 94,700 70,400 369,100 $596,500 $80,000 Current liabilities Long-term debt Common stock, $10 par Retained earnings $74,300 80,600 380,000 103,600 $638,500 85,600 316,000 114,900 $596,500 $534,800 LANDWEHR CORPORATION Income Statement For the Years Ended December 31 2017 $738,000 $705,600 50,700 654,900 395,500 259,400 221,000 63,800 38,400 2018 Sales revenue Less: Sales returns and allowances Net sales Cost of goods sold Gross profit Operating expenses (including income taxes) Net income 39,200 698,800 420,000 278,800 215,000 Additional information: 1. The market price of Landwehr's common stock was $3.00, $5.00, and $9.00 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.g. 6.8 or 6.8%.) 2017 2018 (1) Profit margin (2)Asset turnover (3)Earnings per share (Weighted-average common shares in 2018 were 32,400 and in 2017 were 32,300) times times (4) Price-earnings ratio (5)Payout ratio (6)Debt to assets ratio times times

Explanation / Answer

1. Profit Margin Ratio = Net Income / Net Sales 2017 = 38400/654900 = 5.86% 2018 = 63800/698800 = 9.13% 2.Assets Turnover Ratio = Net Sales / Total Assets 2017 = 654900/596500 = 1.10 times 2018 = 698800/638500 = 1.10 times 3.Earning Per Share = Net Income / weighted Average share outstanding 2017 = 38400/32300 = $1.19 2018 = 63800/32400 = $1.97 4.Price Earning Ratio = Market price per share / earning per share 2017 = 5/1.19 = 4.20times 2018 = 9/1.97 = 4.57 times 5. Payout Ratio = Total Dividend paid / Net Income First of all, we will calculate Total dividend paid 2017 = Changes in retained earning = 114900 - 104200 = $         10,700 Dividend paid= Net Income - Changes in retained earning = 38400 - 10700 = $         27,700 2017 Payout Ratio   = 27700/38400 = 72.14 % 2018 Dividende paid 2018 = Changes in retained earning = 103600 -114900 = $       (11,300) Dividend paid = Net Income - Changes in Retained Earning = 63800 - (11300) = $75,100 2018 Payout Ratio = 75100 / 63800 = 117.71% 6. Debt to Assets Ratio = Total debt / total assets 2017 = 85600 / 596500 = 14.35% 2018 = 80600 / 638500 = 12.62%

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