This problem continues the Canyon Canoe Company situation from Chapter F:16. The company wants to invest some of its excess cash in trading securities and is considering two investments, The Paddle Company (PC) and Recreational Life Vests (RLV). The income statement, balance sheet, and other data for both companies follow for 2025 and 2024, as well as selected data for 2023:Requirements1. Using the financial statements given, compute the following ratios for both companies for 2025 and 2024. Assume all sales are credit sales. Round all ratios to two decimal places.a. Current ratiob. Cash ratioc. Inventory turnoverd. Accounts receivable turnovere. Gross profit percentagef. Debt ratiog. Debt to equity ratioh. Profit margin ratioi. Asset turnover ratioj. Rate of return on common stockholders’ equityk. Earnings per sharel. Price/earnings ratiom. Dividend yieldn. Dividend payout2. Compare the companies’ performance for 2025 and 2024. Make a recommendation to Canyon Canoe Company about investing in these companies. Which company would be a better investment, The Paddle Company or Recreational Life Vests? Base your answer on ability to pay current liabilities, ability to sell merchandise and collect receivables, ability to pay long-term debt, profitability, and attractiveness as an investment. Income StatementNet Sales RevenueCost of Goods SoldGross ProfitOperating ExpensesOperating IncomeInterest ExpenseIncome before Income TaxIncome Tax ExpenseNet IncomeBalance SheetCash & Cash EquivalentsAccounts ReceivableAssetsMerchandise InventoryOther Current AssetsTotal Current AssetsLong-term AssetsTotal AssetsLiabilitiesCurrent LiabilitiesLong-term LiabilitiesTotal LiabilitiesTHE PADDLE COMPANYComparative Financial StatementsYears Ended December 31202320252024$430,489$ 425,410258,756256,797171,733168,613153,880151,92217,85316,69186578816,98815,9035,1374,809$ 11,851 $ 11,094$ 69,159 $ 70,79344,79879,91915,494209,37089,834$ 299,204$ 69,55431,682101,23644,452 $ 44,10466,34176,36316,264197,85090,776$ 288,626 $ 276,482$ 60,23229,93690, 168RECREATIONAL LIFE VESTSComparative Financial StatementsYears Ended December 31202320252024$ 410,570$ 383,870299,110280, 190111,460103,68078,29070,83033,17032,8502,7802,98030,39029,8708,7808,630$ 21,610 $ 21,240$ 65,730$ 55,27039,81038,65068,50065,23024,45037,630198,490196,780116,760 116,270$ 313,050$ 315,250$ 90,81096,310187,120$ 90,010105,890195,900$36,46059,930$ 310,640 Balance Sheet (continued)Stockholders' EquityCommon StockRetained EarningsTotal Stockholders' EquityTotal Liabilities and Stockholders' EquityOther DataMarket price per shareAnnual dividend per shareWeighted average number of shares outstandingTHE PADDLE COMPANYComparative Financial StatementsYears Ended December 3120232025202472,79580,885125,173 117,573197,968$ 299,204 $ 288,626$ 21.380.329,000198,458 197,668$ 33.820.308,000RECREATIONAL LIFE VESTSComparative Financial StatementsYears Ended December 31202320252024111,530102,48016,60014,670128,130 117,150$ 315,250 $ 313,050$ 46.37 $ 51.640.530.459,0008,000103,840

the paddle company the recreational company ratios 2024 2025 2024 2025 current ratio…

Answered: This problem continues the Canyon Canoe…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter2: Financial Statements And The Annual Report

Section: Chapter Questions

Problem 2.13MCE

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This problem continues the Canyon Canoe Company situation from Chapter F:16. The company wants to invest some of its excess cash in trading securities and is considering two investments, The Paddle Company (PC) and Recreational Life Vests (RLV). The income statement, balance sheet, and other data for both companies follow for 2025 and 2024, as well as selected data for 2023:

Requirements

1. Using the financial statements given, compute the following ratios for both companies for 2025 and 2024. Assume all sales are credit sales. Round all ratios to two decimal places.
1. a. Current ratio
2. b. Cash ratio
3. c. Inventory turnover
4. d. Accounts receivable turnover
5. e. Gross profit percentage
6. f. Debt ratio
7. g. Debt to equity ratio
8. h. Profit margin ratio
9. i. Asset turnover ratio
10. j. Rate of return on common stockholders’ equity
11. k. Earnings per share
12. l. Price/earnings ratio
13. m. Dividend yield
14. n. Dividend payout
2. Compare the companies’ performance for 2025 and 2024. Make a recommendation to Canyon Canoe Company about investing in these companies. Which company would be a better investment, The Paddle Company or Recreational Life Vests? Base your answer on ability to pay current liabilities, ability to sell merchandise and collect receivables, ability to pay long-term debt, profitability, and attractiveness as an investment.

Income Statement
Net Sales Revenue
Cost of Goods Sold
Gross Profit
Operating Expenses
Operating Income
Interest Expense
Income before Income Tax
Income Tax Expense
Net Income
Balance Sheet
Cash & Cash Equivalents
Accounts Receivable
Assets
Merchandise Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets
Liabilities
Current Liabilities
Long-term Liabilities
Total Liabilities
THE PADDLE COMPANY
Comparative Financial Statements
Years Ended December 31
2023
2025
2024
$430,489
$ 425,410
258,756
256,797
171,733
168,613
153,880
151,922
17,853
16,691
865
788
16,988
15,903
5,137
4,809
$ 11,851 $ 11,094
$ 69,159 $ 70,793
44,798
79,919
15,494
209,370
89,834
$ 299,204
$ 69,554
31,682
101,236
44,452 $ 44,104
66,341
76,363
16,264
197,850
90,776
$ 288,626 $ 276,482
$ 60,232
29,936
90, 168
RECREATIONAL LIFE VESTS
Comparative Financial Statements
Years Ended December 31
2023
2025
2024
$ 410,570
$ 383,870
299,110
280, 190
111,460
103,680
78,290
70,830
33,170
32,850
2,780
2,980
30,390
29,870
8,780
8,630
$ 21,610 $ 21,240
$ 65,730
$ 55,270
39,810
38,650
68,500
65,230
24,450
37,630
198,490
196,780
116,760 116,270
$ 313,050
$ 315,250
$ 90,810
96,310
187,120
$ 90,010
105,890
195,900
$36,460
59,930
$ 310,640

Balance Sheet (continued)
Stockholders' Equity
Common Stock
Retained Earnings
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
Other Data
Market price per share
Annual dividend per share
Weighted average number of shares outstanding
THE PADDLE COMPANY
Comparative Financial Statements
Years Ended December 31
2023
2025
2024
72,795
80,885
125,173 117,573
197,968
$ 299,204 $ 288,626
$ 21.38
0.32
9,000
198,458 197,668
$ 33.82
0.30
8,000
RECREATIONAL LIFE VESTS
Comparative Financial Statements
Years Ended December 31
2023
2025
2024
111,530
102,480
16,600
14,670
128,130 117,150
$ 315,250 $ 313,050
$ 46.37 $ 51.64
0.53
0.45
9,000
8,000
103,840

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