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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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?

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Current assets Cash Accounts receivable, net Inventory Prepaid rent Total current assets Equipment, net Total assets Total current liabilities Long-term liabilities Apples and Nuts Company Balance Sheet At December 31, 2008 and 2007 Total liabilities Common stockholders' equity Retained earnings Total liabilities and stockholders' equity 2008 2007 $ 98,000 $ 90,000 310,000 216,000 275,000 170,000 10,000 6,000 693,000 482,000 180,000 258,000 $873,000 $740,000 $206,000 $223,000 219,000 217,000 425,000 440,000 250,000 190,000 198,000 110,000 $873,000 $740,000 Net income for the year ended December 31, 2008 was $100,000.