Following are selected data from the financial statements of Mother Nature Supplies: $\begin{array} { r r } & \underline { \mathbf { 2 0 1 7 } } & \underline { \mathbf { 2 0 1 6 } } \\ \text {Accounts receivable}&\$ 60,000 & \$ 38,000 \\ \text {Merchandise inventory}& 12,000 & 16,000 \\ \text {Total assets}&450,000 & 380,000 \\ \text {Net sales}&380,000 & 270,000 \\ \text {Cost of goods sold}&160,000 & 210,000 \end{array}$ -Refer to the data for Mother Nature Supplies. ? Which of the following results would be found through a vertical analysis of the balance sheet or the income statement of Mother Nature Supplies?

A) Accounts receivable increased $22,000 during 2017. B) Total assets increased $70,000 during 2017. C) Cost of goods sold increased $50,000 or 23.8% during 2017. D) Gross profit is 57.9% of net sales for 2017. A) Accounts receivable increased $22,000 during 2017. B) Total assets increased $70,000 during 2017. C) Cost of goods sold increased $50,000 or 23.8% during 2017. D) Gross profit is 57.9% of net sales for 2017.

Following are selected data from Westmoreland Company's financial statements. \[\begin{array} { l r r } & \underline { \mathbf { 2 0 1 7 } } & \underline { \mathbf { 2 0 1 6 } } \\ \text { Current liabilities } & \$ 230,000 & \$ 160,000 \\ \text { Long-term debt } & 120,000 & 320,000 \\ \text { Stockholders' equity } & 420,000 & 540,000 \\ \text { Cash payments for additions to plant and equipment } & 45,000 & 32,000 \\ \text { Net cash flow from operating activities } & 80,000 & 51,000 \\ \text { Interest and principal payments } & 12,000 & 8,000 \\ \text { Net operating cash flows before interest and taxes } & 68,000 & 43,000 \\ \text { Net income } & 90,000 & 72,000 \\ \text { Interest expense } & 8,500 & 11,500 \\ \text { Income taxes } & 16,000 & 14,500 \\ \text { Dividends paid } & 15,000 & 30,000\\ \end{array}\] -Refer to the Westmoreland Company data. ? The company's times interest earned ratio for 2017

A) shows an increase in the company's ability to pay its current debt when it comes due. B) indicates the company cannot meet its current year interest payments out of current year earnings. C) increased, which indicates the company's lenders will be pleased. D) decreased, which indicates the company has more cash to pay interest on its debt. A) shows an increase in the company's ability to pay its current debt when it comes due. B) indicates the company cannot meet its current year interest payments out of current year earnings. C) increased, which indicates the company's lenders will be pleased. D) decreased, which indicates the company has more cash to pay interest on its debt.

Following are selected data from Westmoreland Company's financial statements. \[\begin{array} { l r r } & \underline { \mathbf { 2 0 1 7 } } & \underline { \mathbf { 2 0 1 6 } } \\ \text { Current liabilities } & \$ 230,000 & \$ 160,000 \\ \text { Long-term debt } & 120,000 & 320,000 \\ \text { Stockholders' equity } & 420,000 & 540,000 \\ \text { Cash payments for additions to plant and equipment } & 45,000 & 32,000 \\ \text { Net cash flow from operating activities } & 80,000 & 51,000 \\ \text { Interest and principal payments } & 12,000 & 8,000 \\ \text { Net operating cash flows before interest and taxes } & 68,000 & 43,000 \\ \text { Net income } & 90,000 & 72,000 \\ \text { Interest expense } & 8,500 & 11,500 \\ \text { Income taxes } & 16,000 & 14,500 \\ \text { Dividends paid } & 15,000 & 30,000\\ \end{array}\] -Refer to the Westmoreland Company data. ? The company's debt service coverage ratio for 2017 indicates that the

A) company's ability to pay principal and interest to creditors has declined. B) company has more net income available to allocate to stockholders after the payment of debt. C) company had significantly changes in current assets and current liabilities during the period. D) company generates about $2 of cash from operations to cover every $1 of debt. A) company's ability to pay principal and interest to creditors has declined. B) company has more net income available to allocate to stockholders after the payment of debt. C) company had significantly changes in current assets and current liabilities during the period. D) company generates about $2 of cash from operations to cover every $1 of debt.