The financial statements of DeVoe Company are presented here.

Instructions(a) Compute the following values and ratios for 2012. (We provide the results from 2011 for comparative purposes.)(i) Current ratio. (2011: 2.4:1)(ii) Working capital. (2011: $178,000)(iii) Debt to total assets ratio. (2011: 31%)(iv) Free cash flow. (2011: $13,000)(v) Earnings per share. (2011: $1.35)(b) Using your calculations from part (a), discuss changes from 2011 in liquidity, solvency, andprofitability.

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DEVOE COMPANY Income Statement For the Year Ended December 31, 2012 Net sales $700,000 400,000 150,000 Cost of goods sold Selling and administrative expenses Interest expense Income tax expense 7,800 43,000 $ 99,200 Net income DEVOE COMPANY Balance Sheet December 31, 2012 Assets Current assets Cash $ 18,100 34,800 Short-term investments Accounts receivable (net) Inventory 90,700 155,000 Total current assets 298,600 Plant assets (net) 465,300 Total assets $763,900 Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable $119,700 29,000 Total current liabilities 148,700 Bonds payable 110,000 Total liabilities 258,700 Stockholders' equity Common stock 170,000 Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 335,200 505,200 $763,900 $ 71,300 $ 42,000 $ 10,000 65,000 Cash from operating activities Capital expenditures Dividends paid Average number of shares outstanding