Condensed balance sheet and income statement data for Here and There Corporation are presented here.

Gj) Asset turnover.

(k) Debt to total assets.

() Current cash debt coverage.

(m) Cash debt coverage.

(n) Free cash flow.

HERE AND THERE CORPORATION Balance Sheets December 31 Cash Receivables (net)

Other current assets Investments Plant and equipment (net)

Current liabilities Long-term debt Common stock, $10 par Retained earnings 2007 2006 2005

$ 30,000 $ 20,000 $ 18,000 50,000 45,000 48,000 90,000 85,000 64,000 55,000 70,000 45,000 500,000 370,000 258,000

$725,000 $590,000 $433,000

$ 85,000 $ 80,000 $ 30,000 185,000 85,000 20,000 320,000 300,000 300,000 135,000 125,000 83,000

$725,000 $590,000 $433,000 Problems: Set A 691 Perform ratio analysis, and discuss change in financial position and operating results.

(SO 6)

692 CHAPTER 13 Financial Analysis: The Big Picture HERE AND THERE CORPORATION Income Statements For the Years Ended December 31 2007 2006 Sales $640,000 $500,000 Less: Sales returns and allowances 40,000 30,000 Net sales 600,000 470,000 Cost of goods sold 425,000 300,000 Gross profit 175,000 170,000 Operating expenses (including income taxes) 117,000 94,000 Net income $ 58,000 $ 76,000 Additional information: 1. The market price of Here and There’s common stock was $6.00, $9.00, and $7.00 for 2005, 2006, and 2007, respectively. 2. You must compute dividends paid. All dividends were paid in cash.

Instructions

(a) Compute the following ratios for 2006 and 2007.

(1) Profit margin.

(2) Gross profit.

(3) Asset turnover.

(4) Earnings per share.

(5) Price-earnings.

(6) Payout.

(7) Debt to total assets.

(b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in the financial position and operating results from 2006 to 2007 of Here and There Corporation.

Compute ratios; comment