Question: Comparative financial statement data of Bloomfield
Comparative financial statement data of Bloomfield Optical Mart follow:
Other information:
1. Market price of Bloomfield common stock: $82.20 at December 31, 2010, and $52.96 at December 31, 2009.
2. Common shares outstanding: 20,000 during 2010 and 18,000 during 2009.
3. All sales on credit.
Requirements
1. Compute the following ratios for 2010 and 2009:
a. Current ratio
b. Inventory turnover
c. Times-interest-earned ratio
d. Return on assets
e. Return on common stockholders’ equity
f. Earnings per share of common stock
g. Price/earnings ratio
2. Decide whether
(a) Bloomfields financial position improved or deteriorated during 2010 and
(b) the investment attractiveness of Bloomfields common stock appears to have increased or decreased.
3. How will what you learned in this problem help you evaluate an investment?
Transcribed Image Text:
Bloomfield Optical Mart Comparative Income Statements Years Ended December 31, 2010 and 2009 2010 2009 Net sales . Cost of goods sold. Gross profit. $690,000 $590,000 375,000 283,000 307,000 315,000 Operating expenses . Income from operations. Interest expense.. Income before income tax . 126,000 141,000 189,000 166,000 36,000 153,000 50,000 116,000 Income tax expense... 40,000 53,000 Net income $113,000 $ 63,000 Bloomfield Optical Mart Comparative Balance Sheets December 31, 2010 and 2009 2010 2009 2008* Current assets: Cash $ 38,000 $ 40,000 Current receivables, net . 217,000 149,000 $140,000 Inventories. 298,000 285,000 181,000 Prepaid expenses. 9,000 562,000 25,000 Total current assets. 499,000 Property, plant, and equipment, net. 284,000 276,000 $846,000 $775,000 Total assets. 710,000 $281,000 $267,000 236,000 503,000 Total current liabilities . Long-term liabilities.. Total liabilities . Preferred stockholders' equity, 5%, $10 par.. Common Stockholders' equity, no par.. 241,000 522,000 70,000 70,000 254,000 202,000 195,000 Total liabilities and stockholders' equity. $846,000 S775,000 *Selected 2008 amounts.
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