Spiff Corporation						Hobbes, Inc.
	Year 3		Year 2		Year 1		Year 3		Year 2		Year 1
Income Statement
Revenue	11,598		10,470		9,785		14,268		15,624		16,256
Cost of goods sold	8,767		7,901		6,945		10,894		11,723		12,333
Selling & admin. expenses	2,611		2,479		2,620		2,500		2,650		2,612
Interest expense	80		28		14		220		458		432
Net Income	140		62		206		654		793		879
Balance Sheet
Assets
Cash	984		886		950		3,732		3,348		2,819
Accounts receivable	221		231		356		506		375		450
Inventory	1,698		1,455		1,219		2,891		2,851		2,407
Property & equipment (net)	1,312		1,149		919		4,288		3,720		3,620
Total Assets	4,215		3,721		3,444		11,417		10,294		9,296
Liabilities
Accounts payable	743		678		562		3,029		2,824		2,424
Unredeemed gift cards	850		636		717		469		410		500
Long term liabilities	521		446		266		3,109		2,611		2,497
Stockholders' Equity
Common stock	815		815		815		1,290		1,290		1,290
Retained earnings	1,286		1,146		1,084		3,520		3,159		2,585
Total Liabilities and Equity	4,215		3,721		3,444		11,417		10,294		9,296

Required:

1. Calculate the current ratio as well as the liabilities to stockholders equity ratio for each company and assess the results.

2. Calculate the net income percentage as well as the return on investment ratio for each company and assess the results.

3. Based on your results in requirement 1 and 2, which company would you rather

a. sell inventory to, if sold on account?

b. make a long-term loan to?

c. invest in?

4. If each company borrowed $1,500 on a long-term loan, how would that transaction impact each ratio calculated in requirement 1 and 2?

Questions:

1. For the Spiff Corporation, what is the company's current ratio for year 2? Round your answer to two decimal places.

2. For Hobbes Inc., what is the company's liabilities to stockholders' equity ratio for year 3? Round your answer to two decimal places.

3. For Hobbes Inc., what is the company's return on investment ratio for year 3? Round your answer to three decimal places and enter as a number not as a percentage (e.g. 0.209 not 20.9%).

4. Between Spiff and Hobbes, which company would you rather sell inventory to, if sold on account?(Spiff / Hobbes)

5. Between Spiff and Hobbes, which company would you rather make a long-term loan to?(Spiff / Hobbes)

6. Between Spiff and Hobbes, which company would you rather invest in?(Spiff / Hobbes)

7. If the Spiff Corporation borrowed $1,500 on a long-term loan, its net income percentage would_____ (improve. / get worse. / not change.)

8. If Hobbes Inc. borrowed $1,500 on a long-term loan, its return on investment ratio would _____ (improve. / get worse. / not change.)