a. Tanfield is in a better position to pay debt in 2015 than in 2014. The current ratio, cash ratio, and times-interest-earned ratio all improved. The inventory turnover improved, but was offset by a decrease in the gross profit percentage.
b. The attractiveness of Tanfield's stock has improved in 2015. The rate of return on common stockholder's equity increased as well as the earnings per share and price/earnings ratio.
|
|
2015
|
2014
|
|
a.
|
Total current assets
|
$364,000
|
=
|
1.6
|
$370,000
|
=
|
1.54
|
|
Total current liabilities
|
$227,000
|
$240,000
|
|
b.
|
Cash + Cash
|
$91,000 + 0
|
=
|
0.4
|
$88,000 + 0
|
=
|
0.37
|
|
equivalents
|
$227,000
|
$240,000
|
|
Total current liabilities
|
|
c.
|
Net income + Income
|
$51,000 +
|
=
|
6.38
|
$37,000 + 21,000
|
=
|
4.63
|
|
tax expense + Interest
|
19,000 +13,000
|
16,000
|
|
expense
|
$13,000
|
$16,000
|
|
Interest expense
|
|
d.
|
Cost of Goods Sold
|
$239,000
|
=
|
1.58
|
$212,000
|
=
|
1.17
|
|
Average Merchandise
|
($144,000 +
|
($158,000 +
|
|
Inventory
|
158,000) / 2
|
204,000) / 2
|
|
e.
|
Gross Profit
|
$221,000
|
=
|
48.00%
|
$210,000
|
=
|
49.80%
|
|
Net Sales
|
$460,000
|
$422,000
|
|
f.
|
Total Liabilities
|
$344,000
|
=
|
1.45
|
$336,000
|
=
|
1.60
|
|
Total Equity
|
$237,000
|
=
|
36.70%
|
$210,000
|
|
g.
|
Net income - Preferred dividends
|
$51,000 - (3% A
92,000)
|
=
|
$4.39
|
$37,000 - (3% x
|
=
|
33.10%
|
|
10,000
|
92,000)
|
|
Average Common
Stockholder's Equity
|
($145,000 +
118,000)/2 / 2
|
|
|
($118,000 +
|
|
|
|
89,000) / 2
|
|
|
|
Net income -
|
$48,240
|
|
|
$34,240
|
|
h.
|
Preferred dividends
|
|
=
|
|
|
=
|
$3.42
|
|
Weighted average number of common shares outstandin
|
(12,000 +
|
|
|
|
|
10,000) / 2
|
|
|
|
|
i.
|
Market Price per share
|
$86.58
|
= |
19.72
|
$46.54
|
= |
13.6
|
|
of common stock
|
$4.39
|
$3.42
|
|
Earnings Per Share
|