This is a sample problem in my book that I will be using the answer to study.

Natalie and Curtis have comparative balance sheets and income statements for Cookie & Coffee Creations, Inc. They have been told that they can use these financial statements to prepare horizontal and vertical analyses, to calculate financial ratios, to analyze how their business is doing, and to make some decisions they have been considering. Below, you are provided with the balance sheet and income statement of Cookie & Coffee Creations Inc. for its first year of operations; the year ended October 31, 2021. Review the calculations below, and then review the additional case information to calculate the ratios.

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COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31, 2021 Assets Current assets Cash $32,219 Accounts receivable 3,250 Inventory 17,897 Prepaid Rent 6,300 $59,666 Property, plant, and equipment Equipment $99,700 Accumulated depreciation-equipment (9.850 89,850 Total assets $149.516 Liabilities and Stockholders' Equity Current liabilities Accounts payable $5,786 Income taxes payable 18,500 Dividends payable 700 Salaries and wages payable 2,250 Interest payable 250 Notes payable-current portion 4,000 $31,486 Long-term liabilities Notes payable-long-term portion 6,000 Total liabilities 37,486 Stockholders equity Paid-in capital Preferred stock, 2,800 shares issued and outstanding $14,000 Common stock, 25,930 shares issued, 25,180 outstanding 25.930 39,930 Retained earnings 72,600 Total paid-in capital and retained earnings 112,530 Less: Treasury stock-common (750 shares), at cost 500 Total stockholders' equity 112.030 Total liabilities and stockholders' equity $149.516 COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2021 Sales Revenue $462,500 Cost of goods sold 231.250 Gross profit 231,250 Operating expenses Salaries and wages expense $92,500 Depreciation expense 9,850 Other operating expenses 35.850 138.200 Income from operations 93,050 Other expenses Interest expense 550 Income before income tax 92,500 Income tax expense 18.500 Net income $74 000