Financial Statements for Lowe Company Appear Below:
Lowe Company

question 71

Essay

Financial statements for Lowe Company appear below:
Lowe Company
Statement of Financial Position
December 31, Year 2 and Year 1
(dollars in thousands)
$\begin{array}{|l|r|r|}\hline & \text { Year } 2 & \text { Year 1 } \\\hline \text { Cash } & \$ 45 & \$ 30 \\\hline \text { Accounts receivable, net } & \$ 3 & \$ 40 \\\hline \text { Inventory } & \$ 67 & \$ 60 \\\hline \text { Long term investments } & \$ 162 & \$ 150 \\\hline \text { Land } & \$ 128 & \$ 100 \\\hline \text { Building } & 98 & 50 \\\hline \text { Total Assets } & \$ 538 & \$ 430 \\\hline & & \\\hline \text { Accounts Payable } & \$ 36 & \$ 40 \\\hline \text { Notes Payable, Short Term } & \$ 24 & \$ 30 \\\hline \text { Bonds Payable } & \$ 35 & \$ 50 \\\hline \text { Mortgage payable } & \$ 100 & -0 \\\hline \text { Preferred Shares, } 12 \% & \$ 100 & \$ 100 \\\hline \text { Common Shares } & 195 & \$ 170 \\\hline \text { Retained Earnings } & \$ 48 & \$ 40 \\\hline \begin{array}{l}\text { Total Liabilities \& } \\\text { Shareholder's'Equity }\end{array} & \$ 538 & \$ 430 \\\hline\end{array}$
$\begin{array}{|l|r|}\hline&\begin{array}{r}\text { Lowe Company } \\\text { Income Statement } \\\text { For the Year Ended December 31, Year 2} \\\text { (dollars in thousands) }\end{array}\\\hline \text { Sales (All on Account) } & \$ 145 \\\hline \text { Costs of Goods Sold } & \$ 74 \\\hline \text { Gross Margin } & \$ 71 \\\hline \text { Operating Expenses (including interest } & \$ 16\\\text { expense of } \$ 5,000) & \\\hline \text { Net Income before Taxes } & \$ 55 \\\hline \text { Income Taxes }(40 \%) & \$ 22 \\\hline \text { Net Income } & \$ 33\\\hline\end{array}$
Total dividends paid during the year were $25,000,of which $12,000 was paid to the preferred shareholders.
Required:
Calculate the following for Year 2:
a)Current ratio.
b)Acid-test (quick)ratio.
c)Average collection period (age of receivables).
d)Inventory turnover.
e)Return on total assets.
f)Times interest earned.
g)Debt-to-equity ratio.

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Definitions:

Antipoverty Spending

Government expenditures aimed at reducing poverty, often including welfare, healthcare, and education programs.

Teenage Births

Refers to the incidence of childbirth among females aged 13 to 19.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment.

Liberal Theory

Liberal theory advocates for individual rights, free trade, and minimal government intervention in the economy, emphasizing individual freedom and equality.