Financial information for Hanshew Company is presented below and on the shown below.

Additional information:
1. Inventory at the beginning of 2011 was €118,000.
2. Receivables (net) at the beginning of 2011 were €88,000.
3. Total assets at the beginning of 2011 were €630,000.
4. No ordinary share transactions occurred during 2011 or 2012.
5. All sales were on account.

Instructions
(a) Indicate, by using ratios, the change in liquidity and profitability of Hanshew Company from 2011 to 2012.
(b) Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio
(1) As of December 31, 2012,
(2) As of December 31, 2013, after giving effect to the situation. Net income for 2013 was €50,000. Total assets on December 31, 2013, were €700.000.
Situation
(1) 18,000 ordinary shares were sold at par on July 1, 2013.
(2) All of the notes payable were paid in 2013. The only change in liabilities was that the notes payable were paid.
(3) Market price of ordinary shares was €9 on December 31, 2012, and €12.80 on December 31,2013.

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HANSHEW COMPANY Statements of Financial Position December 31 2012 Assets 2011 Land €130,000 175.000 €130,000 Building and equipment (net) Prepaid expenses Inventories 180,000 29.000 23,000 125.000 135.000 80.000 Receivables (net) Short-term investments 98.000 52,000 40,000 Cash 70,000 65,000 €684,000 €648,000 Equity and Liabilities Share capital-ordinary, €10 par Retained earnings Bonds payable, due 2015 Notes payable Accounts payable Accrued liabilities €200.000 €200,000 136,000 150,000 116.000 150,000 100,000 100,000 48,000 42,000 40,000 50,000 €684,000 €648,000 HANSHEW COMPANY Income Statements For the Years Ended December 31 2011 2012 €850,000 620,000 €790,000 Sales Cost of goods sold Gross profit Operating expenses 575,000 230,000 215.000 173,000 187,000 € 43,000 € 42.000 Net income