TEXTBOOK: ACCOUNTING 9E HORNGREN
P15-26AUsing ratios to evaluate a stock investment
Comparative financial statement data of Danfield, Inc., follow:
DANFIELD, INC.
Comparative Income Statement
Years Ended December 31, 2012 and 2011
2012 2011
Requirements:1. Compute the following ratios for 2012 and 2011:
a. Current ratio
b. Times-interest-earned ratio
c. Inventory turnover
d. Gross profit percentage
e. Debt to equity ratio
f. Rate of return on common stockholders' equity
g. Earnings per share of common stock
h. Price/earnings ratio
Decide (a) whether of Danfield's ability to pay debts and to sell inventory improved or deteriorated during 2012 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.
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