Liquidity and solvency of the company

Assignment Help Financial Accounting

Reference no: EM1314637

The question is about ratio analysis finding out liquidity and solvency of the company.

Comparative financial statement data for Arthur Corporation and Lancelot Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2007.

	Arthur Corporation	Lancelot Corporation
	2007	2007
Net sales	$1,950,000	$620,000
Cost of goods sold	1,175,000	340,000
Operating expenses	303,000	98,000
Interest expense	9,000	3,800
Income tax expense	85,000	36,000
Current assets	427,200	190,336
Plant assets (net)	532,000	139,728
Current liabilities	66,325	35,348
Long-term liabilities	108,500	29,620
Additional information:
Cash from operating activities	$148,000	$36,000
Capital expenditures	$90,000	$20,000
Dividends paid	$36,000	$15,000
Average number of shares outstanding	100,000	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 2007.
b) Comment on the relative liquidity of the companies by computing working capital and the current ratios for each company for 2007.
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 2007.

Reference no: EM1314637

Questions Cloud

The final speed of the two bumper cars after collision : A bumper car with mass m1 = 129 kg is moving to the right with a velocity of v1 = 4.50 m/s. A second bumper car with mass m2 = 86.0 kg is moving to the left with a velocity of v2 = -3.6 m/s. The two cars have an elastic collision. Suppose the surface..

Derivation of batman family supply : Draw a graph of the Batman family's supply of loanable funds curve fro 1999. Show the influence of this change on the Batman's supply of loanable funds curve.

Resolve for the skier''s velocity using newton''s laws : Assume the helmholtz coil consists of two sets of coaxial wire loops with 15 turns of radius R=75.00 cm, that are separated by R, and each coil carries the current 0.123A flowing in the same direction. Compute the magnitude and direction of magnetic ..

Determining expected value for probability distribution : The resort's historical climate data suggests that the probability of a good winter with lots of snow during any given year is 40%.

Liquidity and solvency of the company : The question is about ratio analysis finding out liquidity and solvency of the company - relative profitability of the companies by computing the net income and earnings per share for each company for 2007.

How far does he depress it : A 65kg trampoline artist jumps vertically upward from the top of a platform that is 2 m above the trampoline with a speed of 4.80m/s.

Quantity of labour in crusoe economy : Make a table and graph of Crusoe's production function. Find out the Marginal product of labor for Crusoe at different quantities of labor.

Factor the given algebraic expression : Factor the given algebraic expression.

Prepare a balance sheet : Prepare a balance sheet - John Paul is the bookkeeper for Gabelli Company. John has been trying to get the balance sheet of Gabelli Company to balance.

User Account

All Pages