Financial Statement Analysis (Short Answer)

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:

Cash dividends of $50,000 were declared and paid in 2007.

Weighted average number of shares of common stock outstanding

during 2007 were 62,000 shares.

Market value of common stock on December 31,2007 was $15 per

share.

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. (I know that's tedious, but it's

very difficult to give partial credit for incorrect answers if I

can't see how you made the calculation.)

1.

Current ratio

Return on common stockholders' equity

Price-earnings ratio

Inventory turnover ratio

Average days in inventory

Receivable turnover

Average days to collect receivables

Profit margin ratio

Payout ratio

Return on assets