Question

The following are financial statements of Crane Company.

Crane Company Income Statement For the Year Ended December 31, 2022
Net sales		$2,237,000
Cost of goods sold		1,019,000
Selling and administrative expenses		906,500
Interest expense		76,000
Income tax expense		69,500
Net income		$ 166,000

Crane Company Balance Sheet December 31, 2022
Assets
Current assets
Cash		$ 57,400
Debt investments		87,000
Accounts receivable (net)		169,400
Inventory		199,200
Total current assets		513,000
Plant assets (net)		573,000
Total assets		$ 1,086,000
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$ 158,000
Income taxes payable		32,000
Total current liabilities		190,000
Bonds payable		195,530
Total liabilities		385,530
Stockholders’ equity
Common stock		352,000
Retained earnings		348,470
Total stockholders’ equity		700,470
Total liabilities and stockholders’ equity		$1,086,000

Additional information: The net cash provided by operating activities for 2022 was $192,200. The cash used for capital expenditures was $87,500. The cash used for dividends was $30,700. The weighted-average common shares outstanding during the year was 50,000.

(a)

Compute the following values and ratios for 2022. (We provide the results from 2021 for comparative purposes.) (Round Current Ratio and Earnings per share to 2 decimal places, e.g. 15.25 and Debt to assets ratio to 1 decimal place, e.g. 78.9%. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

(i)		Working capital. (2021: $160,500)
(ii)		Current ratio. (2021: 1.65:1)
(iii)		Free cash flow. (2021: $48,700)
(iv)		Debt to assets ratio. (2021: 31%)
(v)		Earnings per share. (2021: $3.15)

(i)		Working capital		$enter a dollar amount
(ii)		Current ratio		enter amount rounded to 2 decimal places	:1
(iii)		Free cash flow		$enter a dollar amount
(iv)		Debt to assets ratio		enter percentages rounded to 1 decimal place	%
(v)		Earnings per share		$enter a dollar amount rounded to 2 decimal places

Answer 1

i.

Working capital = Current assets - Current liabilities

Working capital = $513,000 - $190,000 = $323,000

ii.

Current ratio = Current assets / Current liabilities

Current ratio = $513,000 / $190,000 = 2.7 : 1

iii

Free cash flow = Net cash provided by operatiing activities - Capital expenditure - Dividend

Free cash flow = $192,200 - 87,500 - 30,700 = $74,000

iv

Debt to assets = Total debts / Total assets

Debt to assets = $385,530 / $1,086,000 = 35.5%

v

Earnings per share = Net income / Weighted average shares outstanding

Earnings per share = $166,000 / 50,000 = $3.32