Textbook Problem

Preparation of Ratios

Refer to the financial statements for Richardson Socks Company in Problem 12-89H and the data below.

Required:

1. Prepare all the financial ratios for Richardson for 2019 and 2018 (using percentage terms where appropriate and rounding all answers to two decimal places).

2. CONCEPTUAL CONNECTION Indicate whether Richardsoes short-term liquidity is adequate.

3. CONCEPTUAL CONNECTION Discuss whether Richardson uses its assets efficiently.

4. CONCEPTUAL CONNECTION Determine whether Richardson is profitable.

5. CONCEPTUAL CONNECTION Discuss whether long-term creditors should regard Richardson as a high-risk or a to-risk firm.

6. Perform a Dupont analysis (rounding to two decimal places) for 2019 and 2018.