Comparative financial statement data of Shabby Chic Furniture Company follow:

Other information follows:
1. Market price of common stock was $31.00 at December 31, 2016, and $48.50 at December 31, 2015.
2. Average common shares outstanding were 11,000 during 2016 and 12,000 during 2015.

Requirements
1. Compute the following ratios for 2016 and 2015. Round to two decimal places.

Assume all sales are on credit.
a. Current ratio
b. Inventory turnover
c. Accounts receivable turnover
d. Interest coverage ratio
e. Return on equity
f. Earnings per share of common stock
g. Price-earnings ratio
2. Decide: (a) whether Shabby Chic Furniture Company’s performance improved or deteriorated during 2016; and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.
3. How will what you learned in this problem help you evaluate an investment?

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Shabby Chic Furniture Company Income Statement Years Ended December 31, 2016 and 2015 2016 2016 Net Sales $453,000 $490,000 Cost of Goods Sold 231,000 240,000 250,000 222,000 Gross Profit 133,000 Operating Expenses Income from Operations Interest Expense Income Before Income Tax 132,000 89,000 118,000 10,000 108,000 30,000 $ 78,000 16,000 73,000 24,000 $ 49,000 Income Tax Expense Net Income Shabby Chic Furniture Company Balance Sheet December 31, 2016 and 2015 (Selected 2014 amounts given for computation of ratios) 2016 2015 2014 Current Assets: $ 98,000 $ 97,000 51,000 216,000 22,000 387,000 Cash 45,000 $ 42,000 206,000 230,000 Accounts Receivable, Net Inventory Prepaid Expenses Total Current Assets 30,000 402,000 Property, Plant, and Equipment, Net Total Assets 176,000 198,000 $563,000 $600,000 $230,000 $210,000 121,000 113,000 343,000 331,000 Total Current Liabilities Long-Term Liabilities Total Liabilities Common Stockholders' Equity, No Par Total Liabilities and Stockholders' Equity 269,000 $563,000 $600,000 220,000 280,000