P18-4B Comparative financial statement data of Adolphus, Inc., follow. ADOLPHUS, INC. Comparative Income Statement Years Ended December 31, 20X3 and 20X2 Net sales Cost of goods sold. Gross profit. Operating expenses Income from operations. Interest expense Income before income tax Income tax expense. Net income. 20X3 20X2 $667,000 $599,000 358,000 283,000 309,000 316,000 149,000 147,000 160,000 169,000 57,000 41,000 103,000 128,000 34,000 53,000 $ 69,000 $ 75,000 ADOLPHUS, INC. Comparative Balance Sheet December 31, 20X3 and 20X2 (selected 20X1 amounts given for computations of ratios) 20X3 20X2 20X1 Current assets: Cash... Current receivables, net. Inventories $ 37,000 208,000 340,000 $ 60,000 151,000 286,000 $138,000 184,000 Prepaid expenses. 5,000 20,000 Total current assets. 590,000 517,000 Property, plant, and equipment, net. 287,000 256,000 Total assets $877,000 $773,000 707,000 Total current liabilities $286,000 $267,000 Long-term liabilities. 245,000 235,000 Total liabilities 531,000 502,000 Preferred stockholders' equity, 4%, $20 par. 50.000 50,000 Common stockholders' equity, no-par 296,000 221,000 148,000 Total liabilities and stockholders' equity. $877,000 $773,000 Other information:

a. Market price of Adolphus's common stock: $24.50 at December 31, 20X3, and $36.25 at December 31, 20X2.

b. Common shares outstanding: 15,000 during 20X3 and 14,000 during 20X2. Required 1. Compute the following ratios for 20X3 and 20X2:

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 2. Decide whether

(a) Adolphus' financial position improved or deteriorated during 20X3, and

(b) 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?