P10-8B. Calculate and analyze financial ratios. (LO 5)
You are interested in investing in Apples and Nuts Company, and you have obtained the balance sheets for the company for the past 2 years
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Apples and Nuts Company |
||
|
2008 |
2007 |
|
|
Current assets |
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|
Cash |
$873,000 |
$90,000 |
|
Accounts receivable net |
$ 98,000 |
216,000 |
|
Inventory |
310,000 |
170,000 |
|
Prepaid rent |
275,000 |
5,000 |
|
Total current assets |
10,000 |
482,000 |
|
Equipment net |
693,000 |
258,000 |
|
Total assets |
1 80,000 |
$740,000 |
|
Total current liabilities |
$206,000 |
$223,000 |
|
Long- term liabilities |
219,000 |
217,000 |
|
Total liabilities |
425,000 |
440,000 |
|
Common stockholder’s equity |
250,000 |
1 90,000 |
|
Retained earnings |
1 98,000 |
1 10,000 |
|
Total liabilities and stockholder’s equity |
$873,000 |
$740,ooo |
Net income for the year ended December 3L, 2008 was $ 100,000.
Required
a. Compute as many of the financial statement ratios you have studied as possible with the information from Apples and Nuts Company. (Compute 2008 ratios.)
b. Would you invest in this company? Why or why not? What additional information would be helpful in making this decision?