Comparative financial statement data of Danfield, Inc., follow:

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Comparative financial statement data of Danfield, Inc., follow:

 

 
Danfield, Inc. 
Comparative Income Statement 
Years Ended December 31, 2012 and 2011 
 20152014 
Net sales467,000428,000 
Cost of goods sold237,000218,000 
Gross profit230,000210,000 
Operating expenses136,000134,000 
Income from operations94,00076,000 
Interest expense9,00010,000 
Income before income tax85,00066,000 
Income tax expense24,00027,000 
Net income61,00039,000 
    
 Danfield, Inc. 
 Comparative Balance Sheet
 Years Ended December 31, 2012 and 2011 
   20152014 2013* 
 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, 2015 and $46.54 at December 31, 2014.
2. Common shares outstanding: 12,000 during 2015 and 10,000 during 2014 and 2013.
3. All sales on credit.   
    
Required:   
A.  Compute the following ratios for 2015 and 2014:  

1.  Current ratio

2.  Cash ratio

   
3.  Times-interest-earned ratio   
4.  Inventory turnover   
5.  Gross profit percentage   
6.  Debt to equity ratio   
7.  Rate of return on common stockholders' equity  
8.  Earnings per share of common stock  

9.  Price/earnings ratio

 

B.  Decide (a) whether Danfield’s ability to pay debts and to sell inventory improved or deteriorated during 2015 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.

 
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