Use the information in E5.18 for Sensify Corporation.

Instructions

a. Calculate the current ratio and debt to total assets ratio as at December 31, 2019 and 2020. Calculate the free cash flow for December 31, 2020.

b. Based on the analysis in part (a), comment on the company?s liquidity and financial flexibility.

E5.18

The comparative statement of financial position of Sensify Corporation as at December 31, 2020, follows:

Net income of $37,000 was reported and dividends of $13,000 were declared and paid in 2020. New equipment was purchased, and equipment with a carrying value of $5,000 (cost of $12,000 and accumulated depreciation of $7,000) was sold for $8,000.

Transcribed Image Text:

Sensify Corporation Statement of Financial Position December 31 December 31 2020 $ 53,000 Assets 2019 $ 13,000 Cash Accounts receivable 91,000 88,000 Equipment Less: Accumulated depreclation 27,000 22,000 (11,000) (10,000) Total $161,000 $112,000 December 31 Liabilities and Shareholders' Equity Accounts payable Common shares Retained earnings 2020 2019 $ 20,000 $ 15,000 100,000 80,000 41,000 17,000 Total $161,000 $112,000