P2-6A Condensed balance sheet and income statement data for Sievert Corporation are presented here and on the next page.
SIEVERT CORPORATION
Balance Sheets
December 31
Assets 2012 2011
Cash $ 28,000 $ 20,000
Receivables (net) 70,000 62,000
Other current assets 90,000 73,000
Long-term investments 62,000 60,000
Plant and equipment (net) 510,000 470,000
Total assets $760,000 $685,000
Liabilities and Stockholders’ Equity
Current liabilities $ 75,000 $ 70,000
Long-term debt 80,000 90,000
Common stock 330,000 300,000
Retained earnings 275,000 225,000
Total liabilities and stockholders’ equity $760,000 $685,000
SIEVERT CORPORATION
Income Statements
For the Years Ended December 31
2012 2011
Sales $750,000 $680,000
Cost of goods sold 440,000 400,000
Operating expenses (including income taxes) 240,000 220,000
Net income $ 70,000 $ 60,000
Additional information:
Cash from operating activities $82,000 $56,000
Cash used for capital expenditures $45,000 $38,000
Dividends paid $20,000 $15,000
Average number of shares outstanding 33,000 30,000
Instructions
Compute these values and ratios for 2011 and 2012.
(a) Earnings per share.
(b) Working capital.
(c) Current ratio.
(d) Debt to total assets ratio.
(e) Free cash flow.
(f ) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2011 to 2012 of Sievert Corporation.
P13-2A The comparative statements of Lucille Company are presented here.
LUCILLE COMPANY
Income Statements
For the Years Ended December 31
2012 2011
Net sales $1,890,540 $1,750,500
Cost of goods sold 1,058,540 1,006,000
Gross profit 832,000 744,500
Selling and administrative expenses 500,000 479,000
Income from operations 332,000 265,500
Other expenses and losses
Interest expense 22,000 20,000
Income before income taxes 310,000 245,500
Income tax expense 92,000 73,000
Net income $218,000 $ 172,500
LUCILLE COMPANY
Balance Sheets
December 31
Assets 2012 2011
Current assets
Cash $ 60,100 $ 64,200
Short-term investments 74,000 50,000
Accounts receivable 117,800 102,800
Inventory 126,000 115,500
Total current assets 377,900 332,500
Plant assets (net) 649,000 520,300
Total assets $1,026,900 $852,800
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $ 160,000 $145,400
Income taxes payable 43,500 42,000
Total current liabilities 203,500 187,400
Bonds payable 220,000 200,000
Total liabilities 423,500 387,400
Stockholders’ equity
Common stock ($5 par) 290,000 300,000
Retained earnings 313,400 165,400
Total stockholders’ equity 603,400 465,400
Total liabilities and stockholders’ equity $1,026,900 $852,800
All sales were on account. Net cash provided by operating activities for 2012 was $220,000.
Capital expenditures were $136,000, and cash dividends were $70,000.
Instructions
Compute the following ratios for 2012.
(a) Earnings per share. (h) Days in inventory.
(b) Return on common stockholders’ equity. (i) Times interest earned.
(c) Return on assets. (j) Asset turnover.
(d) Current ratio. (k) Debt to total assets.
(e) Receivables turnover. (l) Current cash debt coverage.
(f ) Average collection period. (m) Cash debt coverage.
(g) Inventory turnover. (n) Free cash flow.
