December 31 Assets Cash Receivables net Other current assets

December 31 Assets Cash Receivables (net) Other current assets Long-term investments Property, plant, and equipment (net) Total assets 2014 28,000 70,000 90,000 62,000 510,000 $760,000 2013 20,000 62,000 73,000 60,000 470,000 $685,000 Liabilities and Stockholders\' Equit Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and stockholders\' equity 75,000 80,000 330,000 275,000 $760,000 70,000 90,000 300,000 225,000 $685,000 SADECKI CORPORATION Income Statements For the Years Ended December 31 Sales revenue Cost of goods sold Operating expenses (including income taxes) Net income 2014 $750,000 440,000 240,000 70,000 2013 $680,000 400,000 220,000 60,000 Problems: Set A 85 Additional information: Net cash provided by operating activities Cash used for capital expenditures Dividends paid Average number of shares outstanding $82,000 $45,000 $20,000 33,000 $56,000 $38,000 $15,000 30,000 Instructions Compute these values and ratios for 2013 and 2014 (a) Earnings per share. (b) Working capital (c) Current ratio. (d) Debt to assets ratio. (e) Free cash flow Rased onthe ratios calculated, discuss briefly the improvement or lack thereof

Solution

Answer (a) Computation of Earning Per Share      ( in $) Detail 2014 2013 Net Income             70,000              60,000 Average No. of Share Outstanding             33,000              30,000 EPS 2.12 2 (Earning/No. of Share) Answer (b) Computation of Working Capital       ( in $) Detail 2014 2013 Current Asset Cash             28,000              20,000 Receivable             70,000              62,000 Other Current Asset 90000 73000 Total Current Asset           188,000           155,000 Current Liability 75000.0 70000.0 Net Working Capital ( Current Asset- Current Liability)       113,000.0          85,000.0 Answer (c) Computation of Current Ratio Detail 2014 2013 Current Asset           188,000           155,000 Current Liability             75,000              70,000 Current Ratio 2.5 2.2 Ccurrent Asset/Current Liability Answer (d) Computation of Debt to Asset   Ratio          (in $) Detail 2014 2013 Total Asset           760,000           685,000 Debt Long -term liabilities 80000 90000 Current liability 75000.0 70000.0 Total Debt 155000.0 160000.0 Debt to Asset Ratio                  0.20                  0.23 Total Debt/ Total Asset Answer (e) Computation of Free cahs Flow ( in $) Detail Current Year Last Year Earning ( After Tax)             70,000              60,000 Depreciation Cash Used for capital Expenditure 45000 38000 Changes in Working capital ( Cahs from Operating Activity- PAT)       12,000.00          4,000.00 Free Cash Flow = EAT+ Depreciation+ Amortization- ( Change in working capital)- capital Expenditure       13,000.00        18,000.00 Answer ( F) Increase in EPS from $ 2 to $2.12 which show that earning/ share has been increased as compare to previous year