Question

Condensed balance sheet and income statement data for Marigold Corp. are presented as follows.

Marigold Corp.

Balance Sheets

December 31

Assets

2017 2016

Cash

$ 30,210 $ 22,210

Receivables (net)

82,900 74,900

Other current assets

102,900 85,900

Long-term investments

62,000 60,000

Property, plant, and equipment (net)

522,900 482,900

Total assets

$ 800,910 725,910

Liabilities and Stockholders’ Equity

Current liabilities

$ 77,210 $ 72,210

Long-term liabilities

92,900 102,900

Common stock

342,900 312,900

Retained earnings

287,900 237,900

Total liabilities and stockholders’ equity

$ 800,910 $ 725,910

Marigold Corp.

Income Statements

For the Years Ended December 31

2017 2016

Sales revenue

$773,000 $681,000

Cost of goods sold

440,000 400,000

Operating expenses (including income taxes)

240,000 220,000

Net income

$ 93,000 $ 61,000

Additional information:

Net cash from operating activities

$108,210 $58,210

Cash used for capital expenditures

$47,210 $38,000

Dividends paid on common shares

$43,000 $17,210

Weighted-average number of shares outstanding

33,000 30,000

Compute these values and ratios for 2016 and 2017. (Round Earnings per share to 2 decimal places, e.g. $2.78 and Current Ratio and Debt to assets ratio to 1 decimal place, e.g. 15.2. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

2017 2016

(a)

Earnings per share.

$ enter a dollar amount for earnings per share for 2017 rounded to 2 decimal places $ enter a dollar amount for earnings per share for 2016 rounded to 2 decimal places

(b)

Working capital.

$ enter a dollar amount for working capital for 2017 $ enter a dollar amount for working capital for 2016

(c)

Current ratio.

enter the current ratio for 2017 rounded to 1 decimal place :1 enter the current ratio for 2016 rounded to 1 decimal place :1

(d)

Debt to assets ratio.

enter debt to assets ratio for 2017 in percentages rounded to 1 decimal place % enter debt to assets ratio for 2016 in percentages rounded to 1 decimal place %

(e)

Free cash flow.

$ enter a dollar amount for free cash flow for 2017 $ enter a dollar amount for free cash flow for 2016

Answer 1

a. Earnings per share = Net income / Weighted average no. of shares outstanding
	2017	= $93,000/33,000 = $ 2.82 per share
	2016	= $61,000/ 30,000 = $ 2.03 per share
b. Working Capital = [ Cash + Receivables + other current assets ] - Current liabilities
	2017	= [$30,210 +$ 82,900 +$ 102,900 ] - $ 77,210 = $138,800
	2016	= [ $22,210 + $ 74,900+ $ 85,900]- $ 72,210 = $ 110,800
c. Current Ratio = Current Assets / Current Liabilities
	2017	= [$30,210 +$ 82,900 +$ 102,900 ] / $ 77,210 =2.8 : 1
	2016	= [ $22,210 + $ 74,900+ $ 85,900] / $ 72,210 = 2.5 : 1
d. Debt to assets ratio = Total Liabilities / Total assets
	2017	=[ $ 77,210 +$ 92,900 ]/ $ 800,910 =21.2 %
	2016	=[ $ 72,210 + $ 102,900 ]/ $ 725,910 = 24.1 %
e. Free Cash flow = Cash provided by operations - Capital expenditures - Cash dividends
	2017	= $ 108,210 -$47,210 -$43,000 = $ 18,000
	2016	= $58,210 - $38,000 -$17,210 = $ 3,000

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