Question

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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  • CreatedApril 29, 2014
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