(Learning Objectives 4: Using ratios to evaluate a share investment) Comparative fi nancial statement data of Bloomfi eld Optical Mart follow:

Other information:

1. Market price of Bloomfi eld ordinary share: $82.20 at December 31, 20X6, and $52.96 at December 31, 20X5.

2. Ordinary shares outstanding: 20,000 during 20X6 and 18,000 during 20X5.

❙ Requirements 1. Compute the following ratios for 20X6 and 20X5:

a. Current ratio

e. Return on common shareholders’ equity

b. Inventory turnover

f. Earnings per share

c. Times-interest-earned ratio g. Price/earnings ratio

d. Return on assets 2. Decide whether

(a) Bloomfi eld’s fi nancial position improved or deteriorated during 20X6 and

(b) the investment attractiveness of Bloomfi eld’s ordinary shares appears to have increased or decreased.

3. How will what you learned in this problem help you evaluate an investment?