Compute the following values and ratios for 2012 we provide

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Reference no: EM13480821

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

$763,900

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.

Reference no: EM13480821

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