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Comparative financial statement data of Lannister Inc

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Comparative financial statement data of Lannister Inc. are as follows:

 

Lannister Inc.

Comparative Income Statement

Years Ended December 31, 2016 and 2015

 

2016 2015

Net sales $687,000 $595,000

Cost of goods sold 375,000 276,000

Gross profit 312,000 319,000

Operating expenses 129,000 142,000

Income from operations 183,000 177,000

Interest expense 37,000 45,000

Income before income tax 146,000 132,000

Income tax expense 36,000 51,000

Net income $110,000 $81,000

 

 

Lannister Inc.

Comparative Balance Sheet

December 31, 2016 and 2015

 

2016 2015 2014

Current assets:

 

 Cash $45,000 $49,000

 Current receivables, net 212,000 158,000 $200,000

 Inventories 297,000 281,000 181,000

 Prepaid expenses 4,000 29,000

 

 Total current assets 558,000 517,000

 

Property, plant and equipment, net 285,000 277,000

 

Total assets $843,000 $794,000 $700,000

Accounts payable 150,000 105,000 112,000

Other current liabilities 135,000 188,000

 

Total current liabilities $285,000 $293,000

 

Long-term liabilities 243,000 231,000

 

Total liabilities 528,000 524,000

 

Common shareholders' equity, no par315,000 270,000 199,000

Total liabilities and shareholders' equity$843,000 $794,000

 

Other information:

Market price of Lannister common stock: $102.17 at December 31, 2016; and $77.01 at December 31, 2015.

Common shares outstanding: 18,000 during 2016 and 17,500 during 2015.

All sales on credit.

  

Compute the following ratios for 2016 and 2015

Current ratio

Quick ratio (acid test)

Receivables turnover and days' sales outstanding (rounded to the nearest whole day)

Inventory turnover and days inventory outstanding (rounded to the nearest whole day)

Accounts payable turnover and days' payable outstanding (rounded to the nearest whole day).

Cash conversion cycle (in days)

Times-interest-earned ratio

Return on assets

Return on common shareholders' equity

Earnings per share of common stock

Price/earnings ratio.

Decide whether (a) Lannister's financial position improved or deteriorated during 2014 and (b) the investment attractiveness of Lannister's common stock appears to have increased or decreased.