Need accounting help with Problem Set 2

Nov 24th, 2015
DreamIt
Category:
Accounting
Price: $20 USD

Question description


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.

Tutor Answer

(Top Tutor) Daniel C.
(997)
School: UT Austin
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