Lanfield, Inc. Comparative Income Statement Years Ended December 31, 2024 and 2023   2024 2023 Net Sales Revenue $459,000 $428,000 Cost of Goods Sold 234,000 212,000 Gross Profit 225,000 216,000 Operating Expenses 134,000 132,000 Income From Operations 91,000 84,000 Interest Expense 13,000 16,000 Income Before Income Tax 78,000 68,000 Income Tax Expense 24,000 26,000 Net Income $54,000 $42,000       Lanfield, Inc. Comparative Balance Sheet December 31, 2024 and 2023   2024 2023 2022* Assets       Current Assets:       Cash $98,000 $97,000   Accounts Receivables, Net 114,000 115,000 $104,000 Merchandise Inventory 146,000 158,000 202,000 Prepaid Expenses 13,000 6,000   Total Current Assets 371,000 376,000   Property, Plant, and Equipment, Net 211,000 180,000   Total Assets $582,000 $556,000 $602,000 Liabilities       Total Current Liabilities $227,000 $243,000   Long-term Liabilities 121,000 96,000   Total Liabilities 348,000 339,000           Stockholders' Equity       Preferred Stock, 5% 98,000 98,000   Common Stockholders' Equity, no par 136,000 119,000 95,000 Total Liabilities and Stockholders' Equity $582,000 $556,000   * Selected 2022 amounts       1. Market price of Lanfield​'s common​ stock: $52.65 at December​ 31, 2024​, and $37.05 at December​ 31, 2023. 2. Common shares​ outstanding: 15,000 on December​ 31, 2024 and 13,000 on December​ 31, 2023 and 2022. 3. All sales are on credit. Requirement 1a. Compute the current ratios for 2024 and 2023.   Begin by selecting the formula to compute the current ratio.   Current ratio =   Part 2 ​Now, compute the current ratios for 2024 and 2023. ​(Round your answers to two decimal​ places, X.XX.)     Current ratio 2024   2023   Part 3 Requirement 1b. Compute the cash ratios for 2024 and 2023.   Begin by selecting the formula to compute the cash ratio.   Cash ratio =   Part 4 ​Now, compute the cash ratios for 2024 and 2023. ​(Round your answers to two decimal​ places, X.XX.)     Cash ratio 2024   2023   Part 5 Requirement 1c. Compute the​ times-interest-earned ratios for 2024 and 2023.   Begin by selecting the formula to compute the​ times-interest-earned ratio.   Times-interest-earned ratio =   Part 6 ​Now, compute the​ times-interest-earned ratios for 2024 and 2023. ​(Round your answers to two decimal​ places, X.XX.)     Times-interest-earned ratio 2024   2023   Part 7 Requirement 1d. Compute the inventory turnover ratios for 2024 and 2023.   Begin by selecting the formula to compute the inventory turnover ratio.   Inventory turnover ratio =   Part 8 ​Now, compute the inventory turnover ratios for 2024 and 2023. ​(Round your answers to two decimal​ places, X.XX.)     Inventory turnover ratio 2024   2023   Part 9 Requirement 1e. Compute the gross profit percentage for 2024 and 2023.   Begin by selecting the formula to compute the gross profit percentage.   Gross profit percentage =   Part 10 ​Now, compute the gross profit percentage for 2024 and 2023. ​(Round your answers to one tenth of a​ percent, X.X. Do not enter the​ %. For​ example, enter​ 10.2% as​ 10.2.)     Gross profit % 2024   % 2023   % Part 11 Requirement 1f. Compute the debt to equity ratios for 2024 and 2023.   Begin by selecting the formula to compute the debt to equity ratio.   Debt to equity ratio =   Part 12 ​Now, compute the debt to equity ratios for 2024 and 2023. ​(Round your answers to two decimal​ places, X.XX.)     Debt to equity ratio 2024   2023   Part 13 Requirement 1g. Compute the rate of return on common​ stockholders' equity for 2024 and 2023.   Begin by selecting the formula to compute the rate of return on common​ stockholders' equity.   Rate of return on common     stockholders' equity =   Part 14 ​Now, compute the rate of return on common​ stockholders' equity for 2024 and 2023. ​(Round your answers to one tenth of a​ percent, X.X. Do not enter the​ %. For​ example, enter​ 10.2% as​ 10.2.)     Rate of return on common stockholders' equity % 2024   % 2023   % Part 15 Requirement 1h. Compute the earnings per share of common stock for 2024 and 2023.   Begin by selecting the formula to compute the earnings per share of common stock.   Earnings per share =   Part 16 ​Now, compute the earnings per share for 2024 and 2023. ​(Round your answers to the nearest​ cent, $X.XX.)     Earnings per share of common stock 2024   2023   Part 17 Requirement 1i. Compute the​ price/earnings ratio for 2024 and 2023.   Begin by selecting the formula to compute the​ price/earnings ratio.   Price/earnings ratio =   Part 18 ​Now, compute the​ price/earnings ratio for 2024 and 2023. ​(Round your interim calculations and final answers to two decimal​ places, X.XX.)     Price/earnings ratio 2024   2023   Part 19 Requirement 2. Decide​ (a) whether Lanfield​'s ability to pay debts and to sell inventory improved or deteriorated during 2024 and​ (b) whether the investment attractiveness of its common stock appears to have increased or decreased.   ​(a) Did Lanfield​'s ability to pay its debts and to sell inventory improve or deteriorate during 2024​? ▼   deteriorate improve Part 20 ​(b) Did the investment attractiveness of Lanfield​'s common stock appear to have increased or​ decreased? ▼   decreased increased

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Reporting Cash Flows

Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.

Balance Sheet

A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.

Financial Statements

Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.

Owner's Capital

Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.