Comparative statement data for Al Sharif Company and Weber Company, two competitors, are presented below. All balance sheet data are as of December 31, 2012.
|
Al Sharif Company
|
Weber Company
|
|
2012
|
2012
|
|
Net sales
|
$450,000
|
$890,000
|
|
Cost of goods sold
|
260,000
|
620,000
|
|
Operating expenses
|
130,000
|
59,000
|
|
Interest expense
|
6,000
|
10,000
|
|
Income tax expense
|
10,000
|
65,000
|
|
Current assets
|
180,000
|
700,000
|
|
Plant assets (net)
|
600,000
|
800,000
|
|
Current liabilities
|
75,000
|
300,000
|
|
Long-term liabilities
|
190,000
|
200,000
|
|
Cash from operating activities
|
46,000
|
180,000
|
|
Capital expenditures
|
20,000
|
50,000
|
|
Dividends paid
|
4,000
|
15,000
|
|
Average number of shares outstanding
|
200,000
|
400,000
|
Instructions
(a) Compute the net income and earnings per share for each company for 2012.
(b) Comment on the relative liquidity of the companies by computing working capital and the current ratio for each company for 2012.
(c) Comment on the relative solvency of the companies by computing the debt to total assets ratio and the free cash flow for each company for 2012.