Financial statements for Stallings Company follow.

Required:

a. Use horizontal analysis to determine which expense item increased by the highest percentage from 2008 to 2009.

b. Use vertical analysis to determine whether the inventory balance is a higher percentage of total assets at the end of 2008 or 2009.

c. Calculate the following ratios for 2008 and 2009. When data limitations prohibit computing averages, use year-end balances in your calculations.
(1) Net margin (2) Return on investment (3) Return on equity (4) Earnings per share (5) Price-earnings ratio (market price per share at the end of 2009 and 2008 was \($12.04\) and \($8.86\) , respectively)
(6) Book value per share of common stock (7) Times interest earned (8) Working capital (9) Current ratio (10) Acid-test ratio (11) Accounts receivable turnover (12) Inventory turnover (13) Debt to equity

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Revenues INCOME STATEMENTS for the Years Ended December 31 2009 2008 Net Sales $315,000 $259,000 Expenses Cost of Goods Sold (189,000) (154,000) General, Selling, and Administrative Expenses (54,000) (46,000) Interest Expense (4,000) (4,500) Income Before Taxes 68,000 Income Tax Expense (40%) (27,200) 54,500 (21,800) Net Earnings $ 40,800 $ 32,700