The following information is available for Gerard Corporation.
|
|
2012
|
2011
|
|
Current assets
|
$54,000
|
36,000
|
|
Total assets
|
240,000
|
205,000
|
|
Current liabilities
|
22,000
|
30,000
|
|
Total liabilities
|
72,000
|
100,000
|
|
Net income
|
80,000
|
40,000
|
|
Cash provided by operating activities
|
90,000
|
56,000
|
|
Preferred stock dividends
|
6,000
|
6,000
|
|
Common stock dividends
|
3,000
|
1,500
|
|
Expenditures on property, plant, and equipment
|
27,000
|
12,000
|
|
Shares outstanding at beginning of year
|
40,000
|
30,000
|
|
Shares outstanding at end of year
|
75,000
|
40,000
|
(a) Compute earnings per share for 2012 and 2011 for Gerard, and comment on the change. Gerard"s primary competitor, Thorpe Corporation, had earnings per share of $1 per share in 2012. Comment on the difference in the ratios of the two companies.
(b) Compute the current ratio and debt to total assets ratio for each year, and comment on the changes.
(c) Compute free cash flow for each year, and comment on the changes.