Scribd
Upload
125 views2 pages

FA - Case Study - Ch02b - Divine

The financial statements of Divine Company for the year ended December 31, 2019 are presented, including the income statement showing net income of $99,200 and balance sheet showing total assets of $763,900. Key metrics are then calculated from the statements, such as current ratio, net working capital, debt-to-assets ratio, free cash flow, and earnings per share, and changes from 2018 in liquidity, solvency, and profitability are discussed.

Uploaded by

Anosha Imran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
125 views2 pages

FA - Case Study - Ch02b - Divine

The financial statements of Divine Company for the year ended December 31, 2019 are presented, including the income statement showing net income of $99,200 and balance sheet showing total assets of $763,900. Key metrics are then calculated from the statements, such as current ratio, net working capital, debt-to-assets ratio, free cash flow, and earnings per share, and changes from 2018 in liquidity, solvency, and profitability are discussed.

Uploaded by

Anosha Imran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Chapter 2: A Further Look at Financial Statements

Case Study: Divine Company

The financial statements of Divine Company are presented here.

DIVINE COMPANY
Income Statement
For the Year Ended December 31, 2019

Net sales $700,000


Cost of goods sold 400,000 Fachbereich Elektrische
Energietechnik
Selling and administrative expenses 150,000
Interest expense 7,800 Dipl.-Kffr.
Income tax expense 43,000 Sabine Katterbach
Net income $ 99,200
Center for Business Education
DIVINE COMPANY
Balance Sheet
Telefon
December 31, 2019 02921 378-3368
Assets E-Mail
Current assets [email protected]
Cash $ 22,100
Debt investments 34,800
Standort Soest
Accounts receivable (net) 90,700
Lübecker Ring 2
Inventory 155,000 59494 Soest
Total current assets 302,600
Plant assets (net) 461,300
Total Assets $763,900

Liabilities and Stockholders’ Equity


Current liabilities
Accounts payable $119,700
Income taxes payable 29,000 Fachhochschule
Total current liabilities 148,700 Südwestfalen
Sitz: Iserlohn
Bonds payable 110,000
Total liabilities 258,700 Hagen
Stockholders’ equity Iserlohn
Common stock 170,000 Meschede
Retained earnings 335,200 Soest
Total stockholders’ equity 505,200 www.fh-swf.de
Total liabilities and stockholders’ equity $763,900

Page 1
Net cash provided by operating activities $61,300
Capital expenditures $42,000
Dividends paid $10,000

Average number of shares outstanding 65,000

Tasks

(a) Compute the following values and ratios for 2019. (We provide the
results from 2018 for comparative purposes.)
(i) Current ratio. (2018: 2.4:1)
(ii) Net Working capital. (2018: $178,000)
(iii) Debt to assets ratio. (2018: 31%)
(iv) Free cash flow. (2018: $13,000)
(v) Earnings per share. (2018: $1.35)

(b) Using your calculations from part (a), discuss changes from 2018 in
liquidity, solvency, and profitability.

Page 2

You might also like