Mann Corporation decided to issue common stock and used the $120,000 proceeds to retire all of its

outstanding bonds on January 1, 2020. The following information is available for the company for 2019

and 2020.

2020 2019

Net income $ 120,000 $ 100,000

Average stockholders' equity 1,000,000 800,000

Current assets $750,000 $650,000

Total assets 1,200,000 1,200,000

Current liabilities 100,000 100,000

Total liabilities 360,000 480,000

Instructions

(a) Compute the Current Ratio, the Debt to Asset Ratio and the Earnings Per Share for both years.

(b) Explain how it is possible that net income increased, but the earnings pre share decreased.

(c) Perform an analysis and explain what you ratio analysis has uncovered for the company between

the year 2020 and 2019