Comparative financial statement data for Bedene Corporation and Groneman Corporation

Comparative financial statement data for Bedene Corporation and Groneman Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2010.

                      Bedene Corporation Groneman Corporation

                                 2010                       2010   

Net sales     $1,900,000                    $620,000

Cost of goods sold  1,175,000        340,000

Operating expenses   303,000         98,000

Interest expense    9,000                   3,800

Income tax expense   85,000           36,000

Current assets    407,200                190,336

Plant assets (net)  532,000            139,728

Current liabilities   66,325             40,348

Long-term liabilities 108,500         29,620

Cash from operating activities   138,000   36,000

Capital expenditures                                      90,000   20,000

Dividends paid                                                36,000                   15,000

Average number of shares outstanding   100,000                  50,000

Instructions

(a) Comment on the relative profitability of the companies by computing the net income and earnings per share for each company for 2010.

(b) Comment on the relative liquidity of the companies by computing working capital and the current ratios for each company for 2010.

(c) Comment on the relative solvency of the companies by computing the debt to total assets ratio and the free cash flow for each company for 2010.