Gygi Corporation, Azen Company, and Stanley Black and Decker_Snap On

E12-2

An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Gygi Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary.

Classify transactions by type of activity.

 

(a) Payment of interest on notes payable.(b) Exchange of land for patent.(c) Sale of building at book value.(d) Payment of dividends.(e) Depreciation.(f) Conversion of bonds into common stock.(g) Receipt of interest on notes receivable.(h) Issuance of capital stock.(i) Amortization of patent.(j) Issuance of bonds for land.(k) Purchase of land.(l) Receipt of dividends on investment in stock.(m) Loss on sale of land.(n) Retirement of bonds.

 

E12-4

Azen Company reported net income of $190,000 for 2012. Azen also reported depreciation expense of $35,000 and a loss of $5,000 on the sale of equipment. The comparative balance sheet shows an increase in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 increase in prepaid expenses.

Prepare the operating activities section—indirect method.

 

Instructions

Prepare the operating activities section of the statement of cash flows for 2012. Use the indirect method.

 

P13-5B

Selected financial data for 

Stanley Black & Decker

, Inc. and 

Snap-On Tools

 for 2009 are presented here (in millions).

Compute selected ratios, and compare liquidity, profitability, and solvency for two companies.

 

 Stanley Black & DeckerSnap-On Tools 

 

and stockholders’ equity

$4,769.1$3,447.4

 

Total assets

Total stockholders’ equity

Current liabilities

Total liabilities

 

Income Statement Data for Year
Net sales	$3,737.1	$2,420.8
Cost of goods sold	2,228.8	1,345.7
Selling and administrative expenses	1,208.2	824.4
Interest expense	63.7	47.7
Other income (loss)	42.4	(6.1)
Income tax expense	54.5	62.7
Net income	$  224.3	$  134.2
Balance Sheet Data (End of Year)
Current assets	$1,411.9	$1,676.1
Property, plant, and equipment (net)	575.9	347.8
Other assets	2,781.3	1,423.5
	Total assets		$4,769.1		$3,447.4
	Current liabilities	$1,192.0	$  739.9
Long-term debt	1,591.0	1,417.5
	Total stockholders’ equity	1,986.1	1,290.0
	Total liabilities
Beginning-of-Year Balances
$4,866.6	$2,710.3
1,706.3	1,186.5
1,193.2	547.5
3,160.3	1,523.8
Other Data
Average receivables (net)	$  604.9	$  612.7
Average inventory	440.5	316.9
Net cash provided by operating activities	539.4	347.1
Capital expenditures	72.9	64.4
Cash dividends	103.6	69.0

Instructions

(a) For each company, compute the following ratios.

(1) Current ratio.(2) Receivables turnover.(3) Average collection period.(4) Inventory turnover.(5) Days in inventory.(6) Profit margin.(7) Asset turnover.(8) Return on assets.(9) Return on common stockholders’ equity.(10) Debt to total assets.(11) Times interest earned.(12) Current cash debt coverage.(13) Cash debt coverage.(14) Free cash flow.