Following are data from the financial statements for Shang Hi Company:

Instructions:
1. Compute the following for 2007 and 2008.
(a) Return on sales
(b) Return on assets
(c) Return on equity
(d) Cash flow-to-net income ratio
(e) Cash flow adequacy ratio
(f) Cash times interest earned ratio
2. In which year did Shang Hi Company perform better, 2007 or 2008? Explain your answer.
3. Shang Hi Company intends to sell a large block of newly issued stock to the public in the first half of 2009. Given your computations in (1), what questions would you like to ask of Shang Hi€™s management before investing in the newly issuedstock?

Transcribed Image Text:

Shang Hi Company Selected Financial Statement Data For the Years Ended December 31, 2008 and 2007 (in mililons of dollars) 2008 2007 Sales Total assets Stockholders equity Net income Cash from operations Cash paid for capital expenditures Cash paid for acquisitions Cash paid for interest Cash paid for income taxes $ 81,000 01,000 30,000 7,700 0,200 2,400 3,200 ,200 3,900 $73,000 92,000 27,000 6,800 18,500 0,600 500 1.000 3,500