Comment on the relative profitability of the companies by

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Comparative financial statement data for Duran Corporation and Kiepert Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2012.


Duran Corporation

Kiepert Corporation

2012

2012

Net sales

$1,800,000

$620,000

Cost of goods sold

1,175,000

340,000

Operating expenses

283,000

98,000

Interest expense

9,000

3,800

Income tax expense

85,000

36,000

Current assets

407,200

190,336

Plant assets (net)

532,000

139,728

Current liabilities

66,325

33,716

Long-term liabilities

$108,500

40,684

Cash from operating activities

138,000

36,000

Capital expenditures

$90,000

20,000

Dividends paid on common stock

36,000

15,000

Average number of shares outstanding

80,000

50,000

Instructions

(a) Comment on the relative profitability of the companies by computing the net income and earnings per share for each company for 2012.

(b) Comment on the relative liquidity of the companies by computing working capital and the current ratios for each company for 2012.

(c) Comment on the relative solvency of the companies by computing the debt to total assets ratio and the free cash flow for each company for 2012.

Reference no: EM13483097

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