Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The comparative balance sheets of Sage Corporation at the beginning and end of the year 2020 appear below. SAGE CORPORATION BALANCE SHEETS Dec. 31, 2020

The comparative balance sheets of Sage Corporation at the beginning and end of the year 2020 appear below.

SAGE CORPORATION BALANCE SHEETS

Dec. 31, 2020

Jan. 1, 2020

Inc./Dec.

Assets
Cash $21,880 $15,320 $6,560 Inc.
Accounts receivable 107,880 90,320 17,560 Inc.
Equipment 40,880 24,320 16,560 Inc.
Less: Accumulated Depreciation-Equipment (17,000 ) (11,000 ) 6,000 Inc.
Total $153,640 $118,960
Liabilities and Stockholders Equity
Accounts payable $21,880 $17,320 4,560 Inc.
Common stock 101,880 82,320 19,560 Inc.
Retained earnings 29,880 19,320 10,560 Inc.
Total $153,640 $118,960

Net income of $45,880 was reported, and dividends of $35,320 were paid in 2020. New equipment was purchased and none was sold.

Compute the current ratio (current assets current liabilities) as of January 1, 2020, and December 31, 2020. (Round ratios to 1 decimal place., e.g. 4.5.)

December 31, 2020

January 1, 2020

Current ratio

image text in transcribed

image text in transcribed

Compute free cash flow for the year 2020. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Free Cash Flow $

image text in transcribed

In light of the analysis in (part b), comment on Sages liquidity and financial flexibility.

Sage company has

image text in transcribed (bad/good)

liquidity and

image text in transcribed (bad/good)

financial flexibility.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

Coping with competitive pressure and sport performance anxiety

Answered: 1 week ago