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.