Comparative financial statement data for Flounder Corp. and Blue Spruce Corp., two competitors, appear below. All balance sheet data are as of December 31, 2017. Flounder Corp. Blue Spruce Corp. 2017 2017 Net sales $1,908,000 $657,200 Cost of goods sold 1,245,500 360,400 Operating expenses 299,980 103,880 Interest expense 9,540 4,028 Income tax expense 90,100 38,160 Current assets 444,000 199,036 Plant assets (net) 563,920 148,112 Current liabilities 70,305 35,739 Long-term liabilities 115,010 43,125 Net cash provided by operating activities 146,280 38,160 Capital expenditures 95,400 21,200 Dividends paid on common stock 38,160 15,900 Weighted-average number of shares outstanding 80,000 50,000 (a) Compute the net income and earnings per share for each company for 2017. (Round Earnings per share to 2 decimal places, e.g. $2.78.) Net Income Earnings per share Flounder Corp. $ $ Blue Spruce Corp. $ $ (b) Compute working capital and the current ratios for each company for 2017. (Round current ratio to 1 decimal place, e.g. 0.7 : 1.) Working Capital Current Ratios Flounder Corp. $ :1 Blue Spruce Corp. $ :1 (c) Compute the debt to assets ratio and the free cash flow for each company for 2017. (Round debt to assets to 1 decimal place, e.g. 78.9%. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Debt to Assets Free Cash Flow Flounder Corp. % $ Blue Spruce Corp. % $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Comparative financial statement data for Flounder Corp. and Blue Spruce Corp., two competitors, appear below. All balance sheet data are as of December 31, 2017.

	Flounder Corp.	Blue Spruce Corp.
	2017	2017
Net sales	$1,908,000	$657,200
Cost of goods sold	1,245,500	360,400
Operating expenses	299,980	103,880
Interest expense	9,540	4,028
Income tax expense	90,100	38,160
Current assets	444,000	199,036
Plant assets (net)	563,920	148,112
Current liabilities	70,305	35,739
Long-term liabilities	115,010	43,125
Net cash provided by operating activities	146,280	38,160
Capital expenditures	95,400	21,200
Dividends paid on common stock	38,160	15,900
Weighted-average number of shares outstanding	80,000	50,000

(a)

Compute the net income and earnings per share for each company for 2017. (Round Earnings per share to 2 decimal places, e.g. $2.78.)

	Net Income	Earnings per share
Flounder Corp.	$	$
Blue Spruce Corp.	$	$

(b)

Compute working capital and the current ratios for each company for 2017. (Round current ratio to 1 decimal place, e.g. 0.7 : 1.)

	Working Capital	Current Ratios
Flounder Corp.	$		:1
Blue Spruce Corp.	$		:1

(c)

Compute the debt to assets ratio and the free cash flow for each company for 2017. (Round debt to assets to 1 decimal place, e.g. 78.9%. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

	Debt to Assets	Free Cash Flow
Flounder Corp.	%	$
Blue Spruce Corp.	%	$

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Step 1 Introduction

Ratio Analysis: Ratio analysis is a process of determining the relationship between accounting figures of financial statements and presenting this relationship for the purpose of Interpretation. It is helpful for the management in analyzing.

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