PREPARATION OF RATIOS Use Jane’s Shoes’ financial statements in Problem 12-80A and the following data to respond to the requirements below.

2009 2008 2007 Average number of common shares outstanding 77,063 76,602 76,067 Accounts receivable $ 667,547 $ 596,018 $ 521,588 Inventories 592,986 471,202 586,594 Total assets 2,187,463 1,872,861 1,708,430 Shareholders’ equity 1,646,026 1,324,149 1,032,789 Stock repurchases 930,111 581,134 288,320 Cash flows from operating activities 190,000 150,000 137,000 Common dividends paid 57,797 45,195 39,555 Dividends per common share 0.75 0.59 0.52 Market price per share:

High 90.25 77.45 54.50 Low 55.00 35.12 26.00 Close 86.33 71.65 43.22 Year Ended December 31, Industry Averages 2009 2008 Return on equity 25.98% 23.04%

Profit margin 0.05 0.04 Asset turnover 2.24 2.56 Leverage 2.32 2.25 Required:

. Prepare all the financial ratios for Jane’s Shoes for 2009 and 2008.

. Explain whether Jane’s Shoes’ short-term liquidity is adequate.

. Discuss whether Jane’s Shoes uses their assets efficiently.
. Determine whether Jane’s Shoes is profitable.
. Discuss whether long-term creditors should regard Jane’s Shoes as a high-risk or a low-risk firm.
. Perform Dupont analysis for 2008 and 2009.