Wurt many Comparative Balance Sheet (dollars in millions) Ending Beginning Balance Balance $ 70 536 620 1,226 1,719 640 1,079 $2,305 $ 91 572 580 1,243 1,656 480 1,176 $2,419 Assets Current assets: Cash and cash equivalents Accounts receivable Inventory Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ $ 205 94 72 371 180 551 180 105 88 373 310 683 800 954 1,754 $2,305 800 936 1,736 $2,419 Rowan Company Income Statement For the Year Ended December 31 (dollars in millions) Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of equipment Income before taxes Income taxes Net income $ 4,350 3,470 880 820 60 4 64 22 st $ 42 Rowan also provided the following information: Rowan also provided the following information: 1. The company sold equipment that had an original cost of $16 million and accumulated depreciation of $9 million. The cash proceeds from the sale were $11 million. The gain on the sale was $4 million. 2. The company did not issue any new bonds during the year. 3. The company paid a cash dividend during the year. 4. The company did not complete any common stock transactions during the year. Required: 1. Using the indirect method, prepare a statement of cash flows for the year. 2. Calculate the free cash flow for the year. 3. To help Rowan assess its liquidity at the end of the year, calculate the following: a. Current ratio b. Acid-test (quick) ratio 4. To help Rowan assess its asset management, calculate the following: a. Average collection period (assuming all sales are on account) bAverage cale period 3. To help Rowan assess its liquidity at the end of the year, calculate the following: a. Current ratio b. Acid-test (quick) ratio 4. To help Rowan assess its asset management, calculate the following: a. Average collection period (assuming all sales are on account) b. Average sale period 5. To help Rowan assess its debt management, calculate the following: a. Debt-to-equity ratio at the end of the year b. Equity multiplier 6. To help Rowan assess its profitability, calculate the following: a. Net profit margin percentage b. Return on equity 7. To help Rowan assess its market performance, calculate the following (assume the par value of the company's common stock is $10 per share): a. Earnings per share b. Dividend payout ratio $ 4,200 Rowan Company Statement of Cash Flows For the Year Ended December 31 Operating activities: Net income Adjustments to convert net income to cash basis: Gain on sale of equipment Depreciation Increase in inventory Increase in accounts payable Decrease in accrued liabilities Decrease in income taxes payable 16,900 16,900 21,100 Net cash provided by operating activities Investing activities: Proceeds from sale of equipment Additions to property, plant and equipment 16,900 21,100 Net cash provided by operating activities Investing activities: Proceeds from sale of equipment Additions to property, plant and equipment 0 Financing activities: Retired bonds payable Cash dividends 0 21,100 Net increase in cash Beginning cash and cash equivalents Ending cash and cash equivalents $ 21,100 Required 1 Required 2 Required Calculate the free cash flow for the yea Free cash flow To help Rowan assess its liquidity at th a. Current ratio b. Acid-test (quick) ratio (Round your answers to 2 decimal plac a. Current ratio b. Acid-test (quick) ratio To help Rowan assess its asset management, calcu a. Average collection period (assuming all sales ar b. Average sale period (Use 365 days in a year. Round your intermediate days a. Average collection period b. Average sale period days
