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The financial statements of DeVoe Company are presented here.
DEVOE COMPANY Income Statement For the Year Ended December 31, 2012
Net sales
$700,000
Cost of goods sold
400,000
Selling and administrative expenses
150,000
Interest expense
7,800
Income tax expense
43,000
Net income
$ 99,200
DEVOE COMPANY Balance Sheet December 31, 2012
Assets
Current assets
$ 18,100
Cash
34,800
Short-term investments
90,700
Accounts receivable (net)
155,000
Inventory
298,600
Total current assets
465,300
Plant assets (net)
$763,900
Total assets
Liabilities and Stockholders" Equity
Current liabilities
Accounts payable
$119,700
Income taxes payable
29,000
Total current liabilities
148,700
Bonds payable
110,000
Total liabilities
258,700
Stockholders" equity
Common stock
170,000
Retained earnings
335,200
Total stockholders" equity
505,200
Total liabilities and stockholders" equity
Cash from operating activities
$ 71,300
Capital expenditures
$ 42,000
Dividends paid
$ 10,000
Average number of shares outstanding
65,000
Instructions
(a) Compute the following values and ratios for 2012. (We provide the results from 2011 for comparative purposes.)
(i) Current ratio. (2011: 2.4:1)
(ii) Working capital. (2011: $178,000)
(iii) Debt to total assets ratio. (2011: 31%)
(iv) Free cash flow. (2011: $13,000)
(v) Earnings per share. (2011: $1.35)
(b) Using your calculations from part (a), discuss changes from 2011 in liquidity, solvency, and profitability.
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