RATIO ANALYSIS

Financial statements for Delano Corporation are presented below.

DELANO CORPORATION

Comparative Balance Sheet

December 31

2012 2011

Assets

Cash................................................................................................... $ 4,000 $ 6,000

Accounts receivable (net).................................................................. 16,000 12,000

Inventory........................................................................................... 20,000 18,000

Land................................................................................................... 28,000 8,000

Machinery.......................................................................................... 62,000 60,000

Accumulated depreciation................................................................. (20,000) (14,000)

Total assets................................................................................... $110,000 $90,000

Liabilities and Stockholders' Equity

Accounts payable............................................................................... $ 10,000 $16,000

Long-term notes payable................................................................... 34,000 19,000

Common stock ($10 par value).......................................................... 50,000 50,000

Retained earnings.............................................................................. 16,000 5,000

Total liabilities and stockholders' equity...................................... $110,000 $90,000

DELANO CORPORATION

Income Statement

For the year ended December 31, 2012

Sales .................................................................................................................... $370,000

Less: Sales returns and allowances ..................................................................... 10,000

Net sales .............................................................................................................. 360,000

Cost of goods sold .............................................................................................. 275,000

Gross profit ......................................................................................................... 85,000

Selling expenses .................................................................................................. 26,000

Administrative expenses ..................................................................................... 14,000

Income before income taxes ............................................................................... 45,000

Income tax expense ............................................................................................ 18,000

Net income .......................................................................................................... $ 27,000

Additional Information: All sales were on account. The market price of Delano