Use the Following Data to Calculate the Liquidity and Profitability

question 222

Essay

Use the following data to calculate the liquidity and profitability ratios listed below. $$\begin{array} { l r l r } \text { Average common shares outstanding } & 10,000 & \text { Current liabilities } & \$ 100,000 \\\text { Capital expenditures } & \$ 20,000 & \text { Net income } & 21,000 \\\text { Cash provided by operating activities } & 32,000 & \text { Net sales } & 150,000 \\\text { Dividends paid } & 5,000 & \text { Total liabilities } & 126,000 \\\text { Current assets } & 190,000 & \text { Total assets } & 210,000\end{array}$$ Instructions
Compute the following:
(a) Current ratio. (d) Debt to assets ratio.
(b) Working capital. (e) Free cash flow.
(c) Earnings per share.

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Definitions:

Value-based Pricing

A pricing strategy where the price is based on the perceived or estimated value of a product or service to the customer, rather than the cost of production.

Operating Costs

Expenses associated with the normal business operations, including cost of goods sold and operational overhead.

Operating Cost

Expenses associated with the day-to-day functions of a business, including costs for rent, utilities, and payroll.

Useful Life

The estimated period over which an asset is expected to be usable for its intended purpose, affecting depreciation calculations.