Comparative financial statement data of Wahl Furniture Co. follow.

Other information:

a. Market price of Wahl common stock: \(\$ 49\) at December \(31,19 \times 4\), and \(\$ 32.50\) at December 31, 19X3.

b. Common shares outstanding: 10,000 during \(19 \mathrm{X} 4\) and 9,000 during \(19 \mathrm{X} 3\).

c. All sales on credit.
\section*{Required}
1. Compute the following ratios for 19X4 and 19X3:

a. Current ratio

b. Inventory turnover

c. Accounts receivable turnover

d. Times-interest-earned ratio

e. Return on assets

f. Return on common stockholders' equity g. Earnings per share of common stock h. Price/earnings ratio i. Book value per share of common stock 2. Decide

(a) whether Wahl's financial position improved or deteriorated during \(19 \mathrm{X} 4\) 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?

Transcribed Image Text:

WAHL FURNITURE CO. COMPARATIVE INCOME STATEMENT YEARS ENDED DECEMBER 31, 19X4 AND 19X3 Net sales Cost of goods sold......... Gross profit............ Operating expenses. Income from operations. Interest expense.. Income before income tax. Income tax expense. Net income 19X4 19X3 $462,000 $427,000 229,000 218,000 233,000 209,000 136,000 134,000 97,000 75,000 11,000 12,000 86,000 63,000 30,000 27,000 $ 56,000 $ 36,000