vo years. P13-6A. Ratios from Comparative and Common-Size Data Consider the following financial statements for Waverly Company. During 2016, management obtained additional bond financing to enlarge its production facilities. The company faced higher production costs during the year for such things as fuel, materials, and freight. Because of temporary government price controls, a planned price increase on products was delayed several months. As a holder of both common and preferred stock, you decide to analyze the financial statements: LO2, 3 X Assets Cash and cash equivalents Accounts receivable (net). Inventory..... Prepaid expenses.. Plant and other assets (net) Total Assets.. Liabilities and Stockholders' Equity Current liabilities. 10% Bonds payable. 9% Preferred stock, $50 Par Value Common stock, $10 Par Value... Retained earnings Total Liabilities and Stockholders' Equity WAVERLY COMPANY Balance Sheets (Thousands of Dollars) 120,000 20,000 Dec. 31, 2016 $ 19,000 55,000 Dec. 31, 2015 $ 12,000 43,000 105,000 14,000 471,000 411,000 $685,000 $585,000 $ 91,000 225,000 75,000 200,000 94,000 $685,000 $585,000 $82,000 160,000 75,000 200,000 68,000 WAVERLY COMPANY Income Statements (Thousands of Dollars) 2016 2015 $820,000 545,000 433,920 $678,000 Sales revenue... Cost of goods sold. Gross profit on sales.. 275,000 244,080 Selling and administrative expenses. 175,000 149,200 Income before interest expense and income taxes. 100,000 94,880 22,500 16,000 Interest expense... Income before income taxes 77,500 78,880 Income tax expense.. 22,900 21,300 Net income...... $ 54,600 $ 57,580 Other financial data (thousands of dollars) Cash provided by operating activities Preferred stock dividends. $ 65,200 6,750 $ 60,500 6,750 Required a. Calculate the following for each year: current ratio, quick ratio, operating-cash-flow-to-current- liabilities ratio (current liabilities were $77,000,000 at January 1, 2015), inventory turnover (inventory was $87,000,000 at January 1, 2015), debt-to-equity ratio, times-interest-earned ra- tio, return on assets (total assets were $490,000,000 at January 1, 2015), and return on common stockholders' equity (common stockholders' equity was $235,000,000 at January 1, 2015). b. Calculate common-size percentages for each year's income statement. C. Comment on the results of your analysis.