S 13 -5 (L earn i ng Obj ec tiv e 5: Ev al u a t e t he t rend i n a co mp any ’ s c u rren t ra ti
S13-5 (Learning Objective 5: Evaluate the trend in a company’s current ratio) Examine the finan- cial data of Stephens Corporation.
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Year Ended December 31 |
2012 |
2011 |
2010 |
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Operating Results |
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Net income………………………………………………….. |
$ 250 |
$ 340 |
$ 342 |
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Per common share………………………………………… |
$1.37 |
$1.68 |
$1.99 |
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Percent of sales…………………………………………….. |
19.9% |
17.9% |
19.3% |
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Return on average stockholders’ equity……………. |
21.0 |
18.0 |
19.0 |
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Financial Position |
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Current assets………………………………………………. |
$ 590 |
$ 497 |
$ 445 |
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Current liabilities …………………………………………. |
$ 362 |
$ 333 |
$ 339 |
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Working capital …………………………………………… |
$ 228 |
$ 164 |
$ 106 |
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Current ratio ……………………………………………….. |
1.63 |
1.49 |
1.31 |
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Show how to compute Stephens current ratio for each year 2010 through 2012. Is the company’s
ability to pay its current liabilities improving or deteriorating?
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