compute and interpret liquidity solvency and profitability ratios 459387

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.