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Problem 9-4 The following financial information is for Oriole Company. ORIOLE COMPANY Balance Sheets December 31 Assets 2017 2016 Cash $ 69,000 $ 65,000 Debt investments (short-term) 55,000 40,000 Accounts receivable 109,000 89,000 Inventory 239,000 168,000 Prepaid expenses 23,000 26,000 Land 129,000 129,000 Building and equipment (net) 264,000 186,000 Total assets $888,000 $703,000 Liabilities and Stockholders Equity Notes payable $169,000 $109,000 Accounts payable 66,000 52,000 Accrued liabilities 42,000 42,000 Bonds payable, due 2020 251,000 170,000 Common stock, $10 par 204,000 204,000 Retained earnings 156,000 126,000 Total liabilities and stockholders equity $888,000 $703,000 ORIOLE COMPANY Income Statements For the Years Ended December 31 2017 2016 Sales revenue $902,000 $800,000 Cost of goods sold 650,000 575,000 Gross profit 252,000 225,000 Operating expenses 191,000 165,000 Net income $ 61,000 $ 60,000 Additional information: 1. Inventory at the beginning of 2016 was $115,000. 2. Accounts receivable (net) at the beginning of 2016 were $89,000. 3. Total assets at the beginning of 2016 were $633,000. 4. No common stock transactions occurred during 2016 or 2017. 5. All sales were on account.

Compute the liquidity and profitability ratios of Oriole Company for 2016 and 2017. (Round current ratio, earnings per share and asset turnover to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 1.8%. If % change is a decrease show the numbers as negative, e.g. -1.83% or (1.83%).) 2017 2016 % Change LIQUIDITY Current ratio :1 :1 % Accounts receivables turnover times times % Inventory turnover times times % 2017 2016 % Change PROFITABILITY Profit margin % % % Asset turnover times times % Return on assets % % % Earnings per share $ $ % The following are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2017, and (2) as of December 31, 2018, after giving effect to the situation. (Round all answers to 1 decimal places, e.g. 1.8 or 1.8%. If % change is a decrease show the numbers as negative, e.g. -1.83% or (1.83%).) Situation Ratio 1. 18,000 shares of common stock were sold at par on July 1, 2018. Net income for 2018 was $54,000. Return on common stockholders equity 2. All of the notes payable were paid in 2018. All other liabilities remained at the same levels as at December 31, 2018. At December 31, 2018, total assets were $903,000. Debt to assets ratio 3. The market price of common stock was $9 and $13 on December 31, 2017 and 2018, respectively. Net income for 2018 was $54,000. Price-earnings ratio 2018 2017 % Change Return on common stockholders equity % % % Debt to assets ratio % % % Price earnings ratio times times %

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