Here and on page 88 are financial statements of Edmiston Company.

EDMISTON COMPANY

Income Statement

For the Year Ended December 31, 2010

Net sales .............$2,218,500

Cost of goods sold ......... 1,012,400

Selling and administrative expenses ... 906,000

Interest expense .......... 98,000

Income tax expense ........ 69,000

Net income ............ $ 133,100

EDMISTON COMPANY

Balance Sheet

December 31, 2010

Assets

Current assets

Cash ..............$ 60,100

Short-term investments ...... 74,000

Accounts receivable (net) ..... 169,800

Inventory ........... 125,000

Total current assets ........ 428,900

Plant assets (net) ......... 625,300

Total assets .......... $1,054,200

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable ..........$ 180,000

Income taxes payable .......... 35,500

Total current liabilities ........... 215,500

Bonds payable ............. 200,000

Total liabilities ............ 415,500

Stockholders’ equity

Common stock ............ 350,000

Retained earnings ............. 288,700

Total stockholders’ equity ......... 638,700

Total liabilities and stockholders’ equity .. $1,054,200

Additional information: The cash provided by operating activities for 2010 was $190,800. The cash used for capital expenditures was $92,000. The cash used for dividends was $31,000. The average number of shares outstanding during the year was 50,000.

Instructions

(a) Compute the following values and ratios for 2010. (We provide the results from 2009 for comparative purposes.)

(i) Working capital. (2009: $160,500)

(ii) Current ratio. (2009: 1.65:1)

(iii) Free cash flow. (2009: $48,700)

(iv) Debt to total assets ratio. (2009: 31%)

(v) Earnings per share. (2009: $3.15)

(b) Using your calculations from part (a), discuss changes from 2009 in liquidity, solvency, and profitability.