Mugs Company
Comparative Balance Sheet
December 31, 2007	2007	2006
Assets
Cash	$ 25,000	$ 40,000
Marketable securities	20,000	60,000
Accounts Receivable (net)	40,000	30,000
Inventory	150,000	170,000
Property,plant and equipment (net)	170,000	200,000
Total Assets	$405,000	$500,000
Liabilities and stockholders' equity
Accounts payable	$ 25,000	$ 30,000
Bond Interest payable	40,000	90,000
Bonds payable	75,000	160,000
Common Stock	175,000	145,000
Retained earnings	90,000	75,000
Total liabilities and stockholders' equity	$405,000	$500,000

		Mugs Company
		Income Statement
		For the Year Ended 12/31/07
Net Sales			$360,000
Cost of goods sold			184,000
Gross profit			176,000
Expenses
Interest Expense		$21,000
Selling Expense		30,000
Administrative Expenses		20,000
Total expenses			71,000
Income before income taxes			105,000
Income tax expense			30,000
Net Income			$75,000

Additional Information:

1. Cash dividends of $50,000 were declared and paid in 2007.
2. The weighted average number of shares of common stock outstanding during 2007 was 62,000 shares.
3. The market value of the common stock in December 31, 2007, was $15 per share.
4. Net cash provided by operating activities for 2007 was $65,000.

Using the financial statements and additional information, compute the following ratios for the Mugs Company for 2007. You need to label your ratios and show your calculations for maximum credit.

1. Current ratio
2. Return on common stockholders' equity
3. Price-earnings ratio
4. Inventory turnover ratio
5. Average days in inventory
6. Receivable turnover
7. Average days to collect receivables
8. Profit margin ratio
9. Payout ratio
10. Return on assets

Answer rating: 100% (QA)

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