Balance sheet December 31 Assets 2007 2006 Cash $25,000 $40,000 Short term investments 15,000 60,000 Accounts receivable 50,000 30,000 Inventory 50,000 70,000 Property, plant and equipment (net) 160,000 200,000 Total assets $300,000 $400,000

Liabilities and stockholders equity Accounts payable $20,000 $30,000 Short term notes payable 40,000 90,000 Bonds payable 80,000 160,000 Common stock 60,000 45,000 Retained earnings 100,000 75,000 Total liabilities and stockholders equity $300,000 $400,000

Income statement (for the year ended December 31, 2007)

Net sales $360,000 Cost of goods sold 184,000 Gross profit 176,000 Expenses Selling expenses 30,000 Administrative expenses 59,000 Total expenses 89,000 Income before interest expense and taxes 87,000 Interest expense 12,000 Income before income taxes 75,000 Income tax expense 30,000 Net income $45,000

Additional information 120,000 shares were outstanding in 2007:90,000 shares were outstanding in 2006 Market value of common stock on December 31, 2007 was $12 per share.

For the year of 2007:

Debt ratio is:

Long term debt ratio:

Debt to equity is:

Times interest earned ratio: