Somerfeld Company is a manufacturer of auto parts having the following financial statements for 20092010. Additional financial

Somerfeld Company is a manufacturer of auto parts having the following financial statements for 2009–2010.

Additional financial information, including industry averages for 2010, where appropriate:

Required

Calculate and interpret the financial ratios (per Exhibit 20.9) for Somerfeld for 2009 and 2010. Since the calculation of many ratios requires the average balance in an account (e.g., average receivables is required in calculating receivables turnover) you may assume that the balances in these accounts in 2009 are the same as those in2008.

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Balance Sheet December 31, 2010 and 2009 2010 2009 $395,000 $125,000 275,000 175,000 Cash Accounts receivable 350,000 Inventory 200,000 Total current assets 945,000 575,000 Long-lived assets 1,440,000 $2.385.000 $200,000 1,500,000 $2.075.000 Total assets Current liabilities $250,000 Long-term debt 900,000 800,000 Shareholder Equity 1,285,000 1,025,000 Total debt and equity 2.075.000 2.385.000