Question

Sandhill Co. Income Statement For the Year Ended December 31, 2022 Net sales $2,225,500 Cost of goods sold 1,010,000 Selling and administrative expenses 900,000 Interest expense 81,000 Income tax expense 73,500 Net income $ 161,000 Sandhill Co. Balance Sheet December 31, 2022 Assets Current assets Cash $ 56,100 Debt investments 83,000 Accounts receivable (net) 169,600 Inventory 206,300 Total current assets 515,000 Plant assets (net) 573,500 Total assets $ 1.088,500

Answer 1

		WORKING CAPITAL
		Working Capital=Current Assets -Current Liabilities
	A	Current Asset in 2022	$515,000
	B	Current Liabilities in 2022	$206,000
	C=A-B	Working Capital	$309,000
		Current Ratio =Current assets/Current Liabilities
	D=A/B	Current Ratio	2.5
		Current Ratio =2.5:1
		FREE CASH FLOW
	E	Cash flow provided by operating activities	$190,600
	F	Cash used for capital expenditure	$85,000
	G	Cash used for dividends	$32,100
	H=E-F-G	Free Cash Flow	$73,500
		DEBT TO ASSET RATIO
		Debt to asset Ratio=Total Liabilities/Total assets
	I	Total Liabilities	$424,515
	J	Total Assets	$1,088,500
	K=I/J	Debt to asset Ratio	0.39
		Debt to Asset Ratio	39%
		EARNING PER SHARE
		Earning Per Share =Net income/Weighted Average Common Shares Outstanding
	L	Net Income	$161,000
	M	Weighted Average Common Shares Outstanding	50000
	EPS=L/M	Earning Per Share	$3.22
	i	Working Capital	$309,000
	ii	Current Ratio	2.5:1
	iii	Free Cash Flow	$73,500
	iv	Debt to Asset Ratio	39%
	v	Earning Per Share	$3.22