Table 12-3: Clorinator, Inc.
Comparative Statements of Income
For the Years Ending December 31, 2X10 and 2X09
	2X10	2X09
Sales	$750	$690
Cost of Goods Sold	440	400
Gross Profit	$310	$290
Less: Operating Expenses	220	205
Operating Income	$ 90	$ 85
Less: Income Tax Expense	40	37
Net Income	$ 50	$ 48
Clorinator, Inc.
Comparative Balance Sheets December 31, 2X10 and 2X09
Current Assets:	2X10	2X09	Liabilities:	2X10	2X09
Cash	$ 20	$ 15	Accounts Payable	$ 24	$ 20
Accounts Receivable	45	37	Taxes Payable	11	15
Inventory	60	70	Note Payable-Current	7	18
Total Current Assets	$125	$122	Total Current Liab.	$ 42	$ 53
Long-Term Assets:			Long-Term Liabilities	80	30
Equipment	$290	$200	Total Liabilities	$122	$ 83
Less: Accum. Depr.	-160	-140	Stockholders' Equity:
Total Long-Term Assets	$130	$ 60	Common Stock	$ 40	$ 40
			Retained Earnings	93	59
			Stockholders Equity	$133	$ 99
			Total Liab. &
Total Assets	$255	$182	Stockholders' Equity	$255	$182

1. 2.1) Referring to Table 12-3, determine the increase or decrease in dollars and percentage for each line in the income statement.

2. 2.2) Referring to Table 12-3, determine the increase or decrease in dollars and percentage for each line on the balance sheet.

3. 2.3) Referring to Table 12-3, prepare a common-size statement for Clorinator, Inc.'s Comparative Statements of Income for 2X10 and 2X09.

4. 2.4) Referring to Table 12-3, prepare a common-size statement for Clorinator, Inc.'s Balance Sheet for 2X10.

2.5) Use the comparative income statement and balance sheet for Clorinator, Inc., for the years ended December 31, 2X10 and 2X09, as shown in Table 12-3. Determine the following ratios for 2X10: a. Quick ratio b. Average collection period in days

c. Total-debt-to-equity d. Pretax return on assets (ROA) e. Return on stockholder's equity (ROE)

MSc. FIN_CF Take-Home Assignments Fall 2020 4

2.6) For each of the following categories, give two examples of financial statement ratios that fit within that category.

a. Short-term liquidity ratios b. Long-term solvency ratios c. Profitability ratios d. Market price and dividend ratios

2.7) For each of the following transactions, indicate whether the current ratio increases (IN), decreases (DE), or is not affected (NA). a. Purchased equipment for cash b. Paid a current liability

c. Cash received from outstanding accounts receivable d. Cash sale of a long-term asset for a gain e. Purchased inventory on credit

2.8) State whether the following ratios are classified as a. ratios that measure long-term solvency, b. ratios that measure profitability, c. ratios used to analyze the company's stock as an investment, or d. ratios that measure short-term liquidity.

1. ________ Return on sales 2. ________ Earnings per share 3. ________Dividend-yield 4. ________ Average collection period in days 5. ________ Total-debt-to-total assets ratio 6. ________Price-earningsratio 7. ________Quickratio 8. ________Total-debt-to-total-equity