Taber Company has just prepared the following comparative annual financial statements for 2012 :

\section*{Required (round percentage and ratios to two decimal places):}
1. For 2012, compute the tests of

(a) profitability,

(b) liquidity,

(c) solvency, and

(d) market. Assume that the quoted price of the stock was \(\$ 23\) per share for 2012. Dividends declared and paid during 2012 were \(\$ 5,200\).
2. Answer the following for 2012:

a. Compute the percentage changes in sales, profit, cash, inventory, and debt.

b. What is the pretax interest rate on the note payable?
3. Identify at least two problems facing the company that are suggested by your responses to (1) and (2).

Transcribed Image Text:

TABER COMPANY Comparative Income Statement For the Years Ended December 31 2012 2011 Sales revenue (one-half on credit) $110,000 $100,000 Cost of sales 52,000 49,000 Gross margin 58,000 51,000 Expenses (including $4,000 interest- 40,000 37,000 expense each year) Pretax profit 18,000 14,000 Income tax on operations (30%) 5,400 4,200 Profit $ 12,600 $ 9,800