Comparative financial statement data of Tanfield, Inc., follow:

1. Market price of Tanfield€™s common stock: $59.36 at December 31, 2012, and $46.65 at December 31, 2011.
2. Common shares outstanding: 13,000 during 2012 and 11,000 during 2011 and 2010.
3. All sales on credit.
Requirements
1. Compute the following ratios for 2012 and 2011:
(a) Current ratio
(b) Times-interest-earned ratio
(c) Inventory turnover
(d) Gross profit percentage
(e) Debt to equity ratio
(f) Rate of return on common stockholders€™ equity
(g) Earnings per share of common stock
(h) Price/earnings ratio
2. Decide (a) whether Tanfield€™s ability to pay debts and to sell inventory improved or deteriorated during 2012 and (b) whether the investment attractiveness of its common stock appears to have increased ordecreased.

Transcribed Image Text:

TANFIELD, INC. Comparative Income Statement Years Ended December 31, 2012 and 2011 2012 2011 Net sales Cost of goods sold Gross profit Operating expenses $ 460,000 $ 422,000 239,000 212,000 $ 221,000 $ 210,000 138,000 136,000 $ 83,000 $ 74,000 Income from operations Intercst expense 13,000 16,000 $ 70,000 S 58,000 Income before income tax Income tax expense 19,000 21,000 $ 51,000 S 37,000 Net income