Comparative financial statement data of Hamden Optical Mart follow:

Other information:

1. Market price of Hamden Optical Mart common stock: $48.15 at December 31, 2018, and $39.96 at December 31, 2017

2. Common shares outstanding: 17,000 during 2018 and 16,000 during 2017

3. All sales on credit

4. Cash dividends paid per share: $1.10 in 2018 and $0.80 in 2017

Requirements
1. Calculate the following ratios for 2018 and 2017:

a. Current ratio

b. Quick (acid-test) ratio

c. Receivables turnover and days’ sales outstanding (DSO)—round to the nearest whole day

d. Inventory turnover and days’ inventory outstanding (DIO)—round to the nearest whole day

e. Accounts payable turnover and days’ payable outstanding (DPO)—use cost of goods sold in the numerator of the turnover ratio and round DPO to the nearest whole day

f. Cash conversion cycle (in days)

g. Times-interest-earned ratio

h. Return on assets—use DuPont Analysis

i. Return on common stockholders’ equity—use DuPont Analysis

j. Earnings per share of common stock

k. Price-earnings ratio

2. Decide whether (a) Hamden Optical Mart’s financial position improved or deteriorated during 2018 and (b) whether the investment attractiveness of the company’s common stock appears to have increased or decreased from 2017 to 2018.

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

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A1 Hamden Optical Mart Comparative Income Statements Years Ended December 31, 2018 and 2017 2018 2017 $ 595,000 278,000 317,000 145,000 172,000 3 Net sales 4 Cost of goods sold 5 Gross profit 6 Operating expenses 7 Income from operations 8 Interest expense 9 Income before income tax 10 Income tax expense 11 Net income $ 673,000 382,000 291,000 125,000 166,000 35,000 131,000 40,000 $ 91,000 $ 71,000 49,000 123,000 52,000 12 A1 Hamden Optical Mart Comparative Balance Sheets December 31, 2018 and 2017 2 2018 2017 2016* 3 Current assets: Cash Current receivables, net Inventories Prepaid expenses Total current assets 9 Property, plant, and equipment, net 10 Total assets $ 39,000 214,000 293,000 9,000 555,000 287,000 $ 842,000 $ 43,000 152,000 280,000 30,000 505,000 279,000 $ 784,000 $ 139,000 188,000 7 700,000 11 12 Accounts payable 13 Other current liabilities 14 Total current liabilities 15 Long-term liabilities 16 Total liabilities 17 Common stockholders' equity, no par 18 Total liabilities and stockholders' equity 19 $ 120,000 141,000 261,000 243,000 504,000 338,000 $ 842,000 $ 98,000 195,000 293,000 232,000 525,000 259,000 $ 784,000 108,000 197,000 *Selected 2016 amounts.