THE PADDLE COMPANY RECREATIONAL LIFE VESTS Comparative Financial Statements Comparative Financial Statements Years Ended December 31 Years Ended December 31Income Statement201920182017 201920182017Net Sales Revenue$ 435,489$ 425,410 $ 410,570$ 383,870 Cost of Goods Sold 258,756 256,797 299,110 280,190 Gross Profit176,733168,613 111,460103,680 Operating Expenses 153,880 151,922 78,290 70,830 Operating Income22,85316,691 33,17032,850 Interest Expense 865 788 2,780 2,980 Income before Income Tax21,98815,903 30,39029,870 Income Tax Expense 5,137 4,809 8,780 8,630 Net Income$ 16,851$ 11,094 $ 21,610$ 21,240Balance Sheet201920182017 201920182017Assets Cash & Cash Equivalents$ 69,159$ 70,793 $ 65,730$ 55,270 Accounts Receivable44,79844,452$ 44,104 39,81038,650$ 36,460Merchandise Inventory79,91966,34176,363 68,50065,23059,930Other Current Assets 15,494 16,264 24,450 37,630 Total Current Assets209,370197,850 198,490196,780 Long-term Assets 89,834 90,776 116,760 116,270 Total Assets$ 299,204$ 288,626$ 276,482 $ 315,250$ 313,050$ 310,640Liabilities Current Liabilities$ 69,554$ 60,232 $ 90,810$ 90,010 Long-term Liabilities31,68229,936 96,310105,890 Total Liabilities101,23690,168 187,120195,900 Stockholders’ Equity Common Stock72,79580,885 111,530102,480 Retained Earnings 125,173 117,573 16,600 14,670 Total Stockholders’ Equity 197,968 198,458197,668 128,130 117,150103,840Total Liabilities and Stockholder’s Equity$ 299,204$ 288,626 $ 315,250$ 313,050 Other Data Market price per share$ 21.38$ 33.82 $ 46.37$ 51.64 Annual dividend per share0.320.30 0.530.45 Weighted average number of shares outstanding9,0008,000 Using the financial statements just given, compute the following ratios for both The Paddle Company (PC) and Recreational Life Vests (RLV) for 2019 and 2018. Assume all sales are credit sales. Round all ratios to two decimal places. Debt ratioDebt to equity ratioProfit margin ratio

The debt ratio is an important solvency ratio that measures a firm’s total liabilities as a…

Answered: THE PADDLE COMPANY RECREATIONAL…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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THE PADDLE COMPANY		RECREATIONAL LIFE VESTS
	Comparative Financial Statements		Comparative Financial Statements
	Years Ended December 31		Years Ended December 31
Income Statement	2019	2018	2017	2019	2018	2017
Net Sales Revenue	$ 435,489	$ 425,410		$ 410,570	$ 383,870
Cost of Goods Sold	258,756	256,797		299,110	280,190
Gross Profit	176,733	168,613		111,460	103,680
Operating Expenses	153,880	151,922		78,290	70,830
Operating Income	22,853	16,691		33,170	32,850
Interest Expense	865	788		2,780	2,980
Income before Income Tax	21,988	15,903		30,390	29,870
Income Tax Expense	5,137	4,809		8,780	8,630
Net Income	$ 16,851	$ 11,094		$ 21,610	$ 21,240
Balance Sheet	2019	2018	2017	2019	2018	2017
Assets
Cash & Cash Equivalents	$ 69,159	$ 70,793		$ 65,730	$ 55,270
Accounts Receivable	44,798	44,452	$ 44,104	39,810	38,650	$ 36,460
Merchandise Inventory	79,919	66,341	76,363	68,500	65,230	59,930
Other Current Assets	15,494	16,264		24,450	37,630
Total Current Assets	209,370	197,850		198,490	196,780
Long-term Assets	89,834	90,776		116,760	116,270
Total Assets	$ 299,204	$ 288,626	$ 276,482	$ 315,250	$ 313,050	$ 310,640
Liabilities
Current Liabilities	$ 69,554	$ 60,232		$ 90,810	$ 90,010
Long-term Liabilities	31,682	29,936		96,310	105,890
Total Liabilities	101,236	90,168		187,120	195,900
Stockholders’ Equity
Common Stock	72,795	80,885		111,530	102,480
Retained Earnings	125,173	117,573		16,600	14,670
Total Stockholders’ Equity	197,968	198,458	197,668	128,130	117,150	103,840
Total Liabilities and Stockholder’s Equity	$ 299,204	$ 288,626		$ 315,250	$ 313,050
Other Data
Market price per share	$ 21.38	$ 33.82		$ 46.37	$ 51.64
Annual dividend per share	0.32	0.30		0.53	0.45
Weighted average number of shares outstanding	9,000	8,000

Using the financial statements just given, compute the following ratios for both The Paddle Company (PC) and Recreational Life Vests (RLV) for 2019 and 2018. Assume all sales are credit sales. Round all ratios to two decimal places.

Debt ratio
Debt to equity ratio
Profit margin ratio

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