Comparative financial statement data of Lounge Around Furniture Company follow:

Other information follows:
a. Market price of common shares was $48 at December 31, 2014, and $30.75 at December 31, 2013.
b. Common shares outstanding were 10,000 during 2014 and 9,000 during 2013.
c. All sales were made on credit.
d. The full amount of preferred dividends was paid.
Requirements
1. Compute the following ratios for 2014 and 2013:
a. Current ratio
b. Inventory turnover
c. Accounts receivable turnover
d. Times-interest-earned ratio
e. Return on common shareholders€™ equity
f. Earnings per share of common shares
g. Price/earnings ratio
2. Decide
(a) Whether Lounge Around Furniture Company€™s financial position improved or deteriorated during 2014
(b) Whether the investment attractiveness of its common shares appears to have increased or decreased.
3. How will what you learned in this problem help you evaluate an investment?

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Lounge Around Furniture Company Income Statement Years Ended December 31, 2014 and 2013 2014 2013 Net Sales Cost of Goods Sold Gross Profit Operating Expenses Income from Operation:s Interest Expense Income Before Income Tax Income Tax Expense Net Income $482,000 $457,000 229,000 228,000 138,000 90,000 14.000 76,000 23,000 64,000 53,000 238,000 244,000 140,000 104,000 12,000 92,000 28,000 Lounge Around Furniture Company Balance Sheet December 31, 2014 and 2013 (Selected 2012 amounts given for computation of ratios) 2014 2013 2012 Current Assets: Cash S 98,000 99,000 108,000 112,000 $104,000 164,000 154,000 185,000 Accounts Receivable, Net Inventory Prepaid Expenses Total Current Assets Property, Plant, and Equipment, Net Total Assets 28,00020,000 98,000 385,000 191,000 180,000 $589,000 $565,000 Total Current Liabilities Long-Term Liabilities Total Liabilities Preferred Shareholders' Equity, 8% Common Shareholders' Equity Total Liabilities and Shareholders' Equity $208,000 $228,000 121,000117,000 329,000 345,000 100,000100,000 160,000 120,000 100,000 $589,000 $565,000