Question: Comparative financial statement data of Hamden
Comparative financial statement data of Hamden Optical Mart follow: 
Other information: 1. Market price of Hamden common stock: $102.17 at December 31, 2012, and $77.01 at December 31, 2011 2. Common shares outstanding: 18,000 during 2012 and 17,500 during 2011 3. All sales on credit Requirements 1. Compute the following ratios for 2012 and 2011: a. Current ratio b. Quick (acid-test) ratio c. Receivables turnover and days sales outstanding (DSO) (round to the nearest whole day) d. Inventory turnover and days inventory outstanding (DIO) (round to the nearest whole day) e. Accounts payable turnover and days payable outstanding (DPO) (round to the nearest whole day) f. Cash conversion cycle (in days) g. Times-interest-earned ratio h. Return on assets (use DuPont analysis) i. Return on common stockholders’ equity (use DuPont analysis) j. Earnings per share of common stock k. Price/earnings ratio 2. Decide whether (a) Hamden’s financial position improved or deteriorated during 2012 and (b) The investment attractiveness of Hamden’s common stock appears to have increased or decreased. 3. How will what you learned in this problem help you evaluate an investment?
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Hamden Optical Mart Comparative Income Statements Years Ended December 31, 2012 and 2011 2012 $687,000 2011 Net sales $595,000 Cost of goods sold Gross profit 375,000 276,000 312,000 319,000 Operating expenses Income from operations 129,000 142,000 183,000 177,000 Interest expense 37,000 45,000 Income before income tax 146,000 132,000 36,000 $110,000 $ 81,000 Income tax expense 51,000 Net income Hamden Optical Mart Comparative Balance Sheets December 31, 2012 and 2011 2012 2011 2010* Current assets: $ 45,000 $ 49,000 158,000 $200,000 Cash Current receivables, net 212,000 Inventories 297,000 281,000 181,000 Prepaid expenses 4,000 29,000 517,000 Total current assets 558,000 Property, plant, and equipment, net 285,000 277,000 Total assets $843,000 $794,000 700,000 Accounts payable 150,000 105,000 112,000 Other current liabilities 135,000 $285,000 188,000 $293,000 Total current liabilities 231,000 524,000 Long-term liabilities 243,000 528,000 Total liabilities Common stockholders' equity, no par Total liabilities and Stockholders' equity 315,000 270,000 199,000 $843,000 $794,000 *Selected 2010 amounts.
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