The financial statements of Windsor Company are presented here.

WINDSOR COMPANY

Income Statement

For the Year Ended December 31, 2010

Net sales .............$700,000

Cost of goods sold ......... 400,000

Selling and administrative expenses ... 150,000

Interest expense ........... 7,800

Income tax expense ......... 43,000

Net income ............. $ 99,200

WINDSOR COMPANY

Balance Sheet

December 31, 2010

Assets

Current assets

Cash ........... $ 23,100

Short-term investments ... 34,800

Accounts receivable (net) .. 106,200

Inventory ......... 155,000

Total current assets ..... 319,100

Plant assets (net) ...... 465,300

Total assets ........$784,400

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable........... $120,200

Income taxes payable .......... 29,000

Total current liabilities ......... 149,200

Bonds payable ............. 130,000

Total liabilities ............ 279,200

Stockholders’ equity

Common stock ............ 170,000

Retained earnings ........... 335,200

Total stockholders’ equity ......... 505,200

Total liabilities and stockholders’ equity .. $784,400

Cash from operating activities ....... $ 71,300

Capital expenditures ........... $ 42,000

Dividends paid .............. $ 10,000

Average number of shares outstanding ... 65,000

Instructions

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

(i) Current ratio. (2009: 2.4:1)

(ii) Working capital. (2009: $178,000)

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

(iv) Free cash flow. (2009: $13,000)

(v) Earnings per share. (2009: $1.35)

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