104) Discuss any strengths and/or weaknesses disclosed by the following cash flow statement:
Apsley Corporation
Cash Flow Statement
For the Year Ended December 31, 2011
Operating activities:
Income from operations$ 27,500
Add (subtract) noncash items:
Amortization$ 13,400
Net reduction in current
assets other than cash5,300
Net reduction in current
liabilities(4,900)13,800
Net cash inflow from operating activities$ 41,300
Investing activities:
Purchase of equipment$(85,000)
Net cash outflow from investing activities$(85,000)
Financing activities:
Issuance of bonds payable$120,000
Payment of dividends(40,000)
Net cash inflow from financing activities$ 80,000
Increase in cash$ 36,300
106) Following is a comparative balance sheet for Wildfire Corporation:
Wildfire Corporation
Comparative Balance Sheet
December 31, 2011 and 2010
20112010
Current assets:
Cash$ 140,000$ 90,000
Short-term investments90,00080,000
Accounts receivable, net350,000220,000
Inventory500,000430,000
Prepaid expenses30,00030,000
Total current assets$1,110,000$ 850,000
Property, plant, and equipment, net750,000500,000
Other assets280,000300,000
Total assets$2,140,000$1,650,000
Current liabilities:
Short-term notes payable$650,000$670,000
Accounts payable200,000225,000
Total current liabilities$850,000$895,000
Long-term debt380,000220,000
Total liabilities$1,230,000$1,115,000
Shareholders' equity:
Common shares$500,000$500,000
Retained earnings410,00035,000
Total shareholders' equity$ 910,000$535,000
Total liabilities and shareholders' equity$2,140,000$1,650,000
Notes: Net sales (all on credit) and cost of goods sold for the year ended December 31, 2011, were $2,000,000 and $1,200,000, respectively. The number of common shares outstanding has been 50,000 since the company began operations.
Required:
Calculate the following ratios for the year ended December 31, 2011:
a. current ratio
b. acid-test ratio
c. inventory turnover
d. accounts receivable turnover
e. debt ratio
f. book value per common share of stock