The financial statements of DeVoe Company are presented here.
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DEVOE COMPANY
Income Statement
For the Year Ended December 31, 2012
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Net sales
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$700,000
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Cost of goods sold
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400,000
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Selling and administrative expenses
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150,000
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Interest expense
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7,800
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Income tax expense
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43,000
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Net income
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$ 99,200
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DEVOE COMPANY
Balance Sheet
December 31, 2012
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Assets
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Current assets
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$ 18,100
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Cash
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34,800
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Short-term investments
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90,700
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Accounts receivable (net)
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155,000
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Inventory
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298,600
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Total current assets
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465,300
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Plant assets (net)
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$763,900
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Total assets
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Liabilities and Stockholders" Equity
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Current liabilities
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Accounts payable
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$119,700
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Income taxes payable
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29,000
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Total current liabilities
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148,700
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Bonds payable
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110,000
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Total liabilities
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258,700
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Stockholders" equity
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Common stock
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170,000
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Retained earnings
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335,200
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Total stockholders" equity
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505,200
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Total liabilities and stockholders" equity
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$763,900
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Cash from operating activities
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$ 71,300
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Capital expenditures
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$ 42,000
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Dividends paid
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$ 10,000
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Average number of shares outstanding
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65,000
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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.