Part 1 Instructions

Use below balance sheets and income statements and compute values and ratios a-f 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.

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Part II Instructions

Compute the following ratios for 2012.

(a) Earnings per share.

(b) Return on common stockholders’ equity.

(c) Return on assets.

(d) Current ratio.

(e) Receivables turnover..

(f ) Average collection period.

(g) Inventory turnover.

(h) Days in inventory.

(i) Times interest earned.

(j) Asset turnover.

(k) Debt to total assets.

(l) Current cash debt coverage

(m) Cash debt coverage.

(n) Free cash flow

 

 

 

 

 

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

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