Reference no: EM13572778

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.