(a)
Formula of working capital:
Formula of current ratio:
Formula of free cash flow:
Debt to assets ratio: This financial ratio evaluates the ability of a company to pay off long-term debt obligations owed to creditors. This ratio assesses the solvency of a company.
Formula of debt to assets ratio:
Earnings per share (EPS): The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS). This ratio assesses the profitability of a company.
Formula of EPS:
To compute: (a) (i) Working capital, (ii) current ratio (iii) free cash flow (iv) debt to assets ratio (v) earnings per share for Company O for the year 2017.
(b)
To compute: (b) and compare the changes in liquidity, solvency, and profitability of 2017 with the values of 2016
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Financial Accounting: Tools for Business Decision Making, 8th Edition
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