Comparative financial statement data for Bedene Corporation and Groneman Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2010.
| Bedene Corporation | Groneman Corporation | |
| 2010 | 2010 | |
| Net sales | $1,900,000 | $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 | 407,200 | 190,336 |
| Plant assets (net) | 532,000 | 139,728 |
| Current liabilities | 66,325 | 40,348 |
| Long-term liabilities | 108,500 | 29,620 |
| Cash from operating activities | 138,000 | 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 2010.
(b) Comment on the relative liquidity of the companies by computing working capital and the current ratios for each company for 2010.
(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 2010.
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