problem 2 4a comparative financial statement data for bedene corporation and gronema 500845

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.