Need accounting help with Problem Set 2

P2-6A Condensed balance sheet and income statement data for Sadecki
Corporation are presented here and on the next page.

Compute and interpret liquidity, solvency, and profitability ratios.

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

SADECKI
   CORPORATION

  

Balance
   Sheets

  

December
   31

  

 

Assets

 

 

 2014 

 

 

 2013 

 

 

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

 

 

Property, 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 liabilities

 

 

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

 

  

SADECKI
   CORPORATION

  

Income
   Statements

  

For
   the Years Ended December 31

  

 
 
 

 2014 

 

 

 2013 

 

 

Sales revenue

 

 

$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:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by 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 2013 and 2014.

(a) Earnings per share.

(b) Working capital.

(c) Current ratio.

(d) Debt to 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 2013 to 2014 of
Sadecki Corporation.

 
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