As a financial analyst in the planning department for Lindemann Industries, Inc., you have been requested to develop some key ratios from the comparative financial statements. This information is to be used to convince creditors that Lindemann Industries, Inc. is liquid, solvent, and profitable, and that it deserves their continued support. Lenders are particularly concerned about the company’s ability to continue as a going concern.

Here are the data requested and the computations developed from the financial statements:

2012 2011 Current ratio 3.1 2.1 Working capital Up 22% Down 7%

Free cash flow Up 25% Up 18%

Debt to total assets ratio 0.60 0.70 Net income Up 32% Down 8%

Earnings per share $2.40 $1.15 Instructions Lindemann Industries, Inc. asks you to prepare brief comments stating how each of these items supports the argument that its financial health is improving. The company wishes to use these comments to support presentation of data to its creditors. With the class divided into groups, prepare the comments as requested, giving the implications and the limitations of each item regarding Lindemann’s financial well-being.

COMMUNICATION ACTIVITY