Comparative financial statement data of Comfort Way Furniture Company follow:

Other information follows:
a. Market price of common stock was $50.50 at December 31, 2012, and $33.00 at
December 31, 2011.
b. Average common shares outstanding were 1 3,000 during 2012 and 8,000 during
2011.

Requirements
1. Compute the following ratios for 2012 and 2011. Round to two decimal places.
Assume all sales on credit.
a. Current ratio
b. Inventory turnover
c. Accounts receivable turnover
d. Interest coverage ratio
e. Return on equity
f. Earnings per share of common stock
g. Price/earnings ratio
2. Decide
(a) Whether Comfort Way Furniture Company€™s performance improved or deteriorated during 2012
(b) Whether the investment attractiveness of its common stock appears to have increased or decreased.
3. How will what you learned in this problem help you evaluate aninvestment?

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Comfort Way Furniture Company Income Statement Years Ended December 31, 2012 and 2011 2012 2011 $490000 $453,000 Net Sales Cost of Goods Sold Gross Profit Operating Expenses Income from Operations Interest Expense Income Before Income Tax Income Tax Expense Net Income 240,000 250,000 132,000 118,000 231,000 222,000 133,000 89,000 16,000 73,000 27.000 10,000 108,000 32,000 76 Comfort Way Furniture Company Balance Sheet December 31, 2012 and 2011 (Selected 2010 amounts given for computation of ratios) 2012 2011 2010 Current Assets: $105,000 $109,000 76,000 84,000 $96,000 168,000 156,000 187,000 30,00022,000 379,000 371,000 191,000 182000 Cash Accounts Receivable, Net nventory Prepaid Expenses Total Current Assets Property, Plant, and Equipment, Net Total Assets Total Current Liabilities Long-Term Liabilities Total Liabilities Common Stockholders' Equity, no Par Total Liabilities and Stockholders' Equity $210,000 $230,000 129,000 118,000 339,000 348,000 231,000 205,000 201,000