Coogan Development Co., Inc.

2009 Income Statement

Sales $ 25,000

Cost of goods sold 16,000

Depreciation 3,000

Earnings before interest and taxes $ 6,000

Interest paid 2,000

Taxable income $ 4,000

Taxes (34%) 1,360

Net Income $ 2,640

Retained earnings $ 1,584

Dividends 1,056

Coogan Development Co., Inc.

Balance Sheets as of December 31, 2008 and 2009

2008 2009

Assets

Current Assets

Cash $ 4,000 $ 3,000

Accounts Receivable 9,000 11,000

Inventory 5,000 4,500

Total $ 18,000 $18,500

Fixed Assets

Net plant and equipment 30,000 31,500

Total Assets $ 48,000 $50,000

Liabilities and Owners Equity

Current Liabilities

Accounts Payable $ 3,000 $ 2,500

Notes Payable 6,000 6,416

Total $ 9,000 $ 8,916

Long-term Debt $15,000 $ 13,000

Owners Equity

Common stock and

paid-in surplus 14,000 16,500

Retained earnings 10,000 11,584

Total $24,000 $28,084

Total liabilities and equity $48,000 $50,000

(4.1) Compute the measures of short-term solvency (current ratio, quick ratio, and cash ratio), using the 2009 financial statement data

(4.2) Use the DuPont identity to compute the Return on Equity for Coogan Development.

(4.3) Use the DuPont identity to compute the Return on Assets for Coogan Development.