Below are data from the financial statements for Ping Shek Company.

Instructions:
1. Compute the following for 2001 and 2002.

a. Return on sales

b. Return on assets

c. Return on equit}'

d. Cash flow-to-net income ratio

e. Cash flow adequacy ratio

f. Cash times interest earned ratio 

2. In which year did Ping Shek Company perform better: 2001 or 2002? Explain your answer.
3. Ping Shek Company intends to sell a large block of newly issued stock to the public in the first half of 2002. 

Given your computations in (1), what questions would you like to ask of Ping Sheks management before investing in the newly issued stock?

Transcribed Image Text:

Ping Shek Company Selected Financial Statement Data For the Years Ended December 31, 2002 and 2001 (In millions of dollars) Sales Total assets Stockholders' equity Net income Cash from operations Cash paid for capital expenditures Cash paid for acquisitions Cash paid for interest Cash paid for income taxes 2002 2001 $88,000 $74,000 84,000 70,000 22,000 20,000 7,200 4,800 9,600 13,000 8,900 6,600 2,500 200 1,500 1,100 4,100 4,000