Financial information for Hi-Tech Company is presented here.

Additional information:
1. Inventory at the beginning of 2009 was $350,000.
2. Receivables at the beginning of 2009 were $80,000.
3. Total assets at the beginning of 2009 were $1,175,000.
4. No common stock transactions occurred during 2009 or 2010.
5. All sales were on account.
Instructions
(a) Indicate, by using ratios, the change in liquidity and profitability of the company from 2009 to 2010. (Note: Not all profitability ratios can be computed nor can cash basis ratios be computed.)
(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, 2010, and (2) as of December 31, 2011, after giving effect to the situation. Net income for 2011 was$125,000. Total assets on December 31, 2011, were $1,450,000.
Situation Ratio
1. 50,000 shares of common stock were sold .......Return on common stockholders'
at par on July 1, 2011. ................equity
2. All of the notes payable were paid in 2011. .....Debt to total assets
3. The market price of common stock on .......Price-earnings
December 31, 2011, was $6.25. The market
price on December 31, 2010, was$5.

HI-TECH COMPANY Balance Sheets December 31 2010 Assets Cash Short-term investments Receivables Inventories Prepaid expenses Land Building and equipment (net) Total assets 2009 $50,000 42,000 50,000 77,000 310,000 31,000 75,000 80,000 100,000 410,000 30,000 75,000 570,000 400,00 $1,315,000 $985,000 Liabilities and Stockholders' Equit Notes payable 120,000 25,000 90,000 50,000 100,000 500,000 220,000 $985,000 s payable Accrued liabilities Bonds payable, due 2012 Common stock, $5 par Retained earnings Total liabilities and stockholders' equity 160,000 50,000 180,000 500,000 305,000 $1,315,000 HI-TECH COMPANY Income Statements For the Years Ended December 31 2010 2009 Sales Cost of goods sold Gross profit Operating expenses Net income $1,000,000 40,00 635,000 305,000 215,000 $115,000 90,000 655,000 345,000 230,000