Here and on page 86 are financial statements of Chiasson Company.

CHIASSON COMPANY Income Statement For the Year Ended December 31 1,220 165

[35 400 967 1,600 3,200 2

1,600 3,600 210 1,200 700 222 2007 Net sales $2,218,500 Cost of goods sold 1,012,400 Selling and administrative expenses 906,000 Interest expense 98,000 Income tax expense 69,000 Net income $ 133,100 Problems: Set A Net income $800 Tot. current assets $3,759 Tot. assets $8,116 85 Compute ratios; comment on relative profitability, liquidity, and solvency.

(S@R7 A)

C=C Compute and liquidity, solvency, and profitability ratios.

(SO 2, 4, 3}

CEES 86 CHAPTER 2. A Further Look at Financial Statements CHIASSON COMPANY Balance Sheet December 31 Assets 2007 Current assets Cash $ 60,100 Short-term investments 54,000 Accounts receivable (net) 169,800 Inventory 125,000 Total current assets 408,900 Plant assets (net) 625,300 Total assets $1,034,200 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 180,000 Income taxes payable 35,500 Total current liabilities 215,500 Bonds payable 200,000 Total liabilities 415,500 Stockholders’ equity Common stock 330,000 Retained earnings 288,700 Total stockholders’ equity 618,700 Total liabilities and stockholders’ equity $1,034,200 Additional information: The cash provided by operating activities for 2007 was $190,800.

The cash used for capital expenditures was $92,000. The cash used for dividends was

$26,000. The average number of shares outstanding during the year was 50,000.

Instructions Compute the following values and ratios for 2007.

(a) Working capital.

(b) Current ratio.

(c) Free cash flow.

(d) Debt to total assets ratio.

(e) Earnings per share.

Compute and interpret