Here are financial statements of Batcha Company.
|
BATCHA COMPANY
|
|
Income Statement
|
|
For the Year Ended December 31, 2012
|
|
Net sales
|
$2,218,500
|
|
Cost of goods sold
|
1,012,400
|
|
Selling and administrative expenses
|
906,000
|
|
Interest expense
|
78,000
|
|
Income tax expense
|
69,000
|
|
Net income
|
$153,100
|
|
BATCHA COMPANY
|
|
Balance Sheet
|
|
31-Dec-12
|
|
Assets
|
|
|
Current assets
|
|
|
Cash
|
$60,100
|
|
Short-term investments
|
84,000
|
|
Accounts receivable (net)
|
169,800
|
|
Inventory
|
145,000
|
|
Total current assets
|
458,900
|
|
Plant assets (net)
|
575,300
|
|
Total assets
|
$1,034,200
|
|
Liabilities and Stockholders" Equity
|
|
|
Current liabilities
|
|
|
Accounts payable
|
$160,000
|
|
Income taxes payable
|
35,500
|
|
Total current liabilities
|
195,500
|
|
Bonds payable
|
200,000
|
|
Total liabilities
|
395,500
|
|
Stockholders" equity
|
|
|
Common stock
|
350,000
|
|
Retained earnings
|
288,700
|
|
Total stockholders" equity
|
638,700
|
|
Total liabilities and stockholders" equity
|
1,034,200
|
Additional information: The cash provided by operating activities for 2012 was $190,800. The cash used for capital expenditures was $92,000. The cash used for dividends was $31,000. The average number of shares outstanding during the year was 50,000.
Instructions
(a) Compute the following values and ratios for 2012. (We provide the results from 2011 for comparative purposes.)
(i) Working capital. (2011: $160,500)
(ii) Current ratio. (2011: 1.65:1)
(iii) Free cash flow. (2011: $48,700)
(iv) Debt to total assets ratio. (2011: 31%)
(v) Earnings per share. (2011: $3.15)
(b) Using your calculations from part (a), discuss changes from 2011 in liquidity, solvency, and profitability.