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Liquidity of Blackwood Company

Determine the liquidity position of Blackwood Company with the provided financial information.

1.      Determine the liquidity position of Blackwood Company with the provided financial data

Blackwood Company
Balance Sheets as of December 31,
(all numbers in thousands of US dollars)

2007 2006 2005 2,004
Current assets:
Cash $464 $1,012 $1,185
Marketable securities 1,548 394 299
Accounts receivable $15,098 $13,688 $8,875 $9,215
Less: Allowance for Doubtful Accounts 385 381 259 277
Accounts receivable, net 14,713 13,307 8,616
Inventory 7,425 8,585 7,699
Prepaid expenses 725 866 724
Total current assets: 24,875 24,164 18,523
Other assets:
Plant and equipment 106,422 105,642 104,020 104,580
Less: Accumulated depreciation 47,604 49,761 47,949 45,790
Plant and equipment, net 58,818 55,881 56,071
Investments 9,476 9,433 10,474
Other assets 5,842 5,966 5,364
Total long-term assets 74,136 71,280 71,909
Total assets $99,011 $95,444 $90,432

Current liabilities:
Accounts payable 14,090 12,309 11,520
Accrued payables 903 887 588
Short-term debt 2,500 1,000 -
Total current liabilities 17,493 14,196 12,108

Long-term notes payable 40,000 30,000 50,000

Total liabilities 57,493 44,196 62,108

Stockholders' equity:
Common Stock (at par value) 52 52 52
Additional paid-in capital 1,116 1,116 1,116
Retained earnings 64,434 61,116 57,777
Less: Treasury stock (24,084) (11,036) (30,621)
Total stockholders' equity 41,518 51,248 28,324
Total liabilities and stockholders' equity $99,011 $95,444 $90,432

Income Statements For the Years Ended December 31,
(all numbers in thousands of US dollars)
2,007 2,006 2,005 2,004

Sales $118,421 $110,994 $101,863 $106,456
Less: COGS 78,539 73,824 69,143 71,314
Gross margin 39,882 37,170 32,720 35,142
Less: Selling, general, and
administrative expenses 23,674 22,749 21,396 22,898
Operating income 16,208 14,421 11,324 12,244
Less: interest expense 2,791 1,757 3,068 2,833
Net income before income taxes 13,417 12,664 8,256 9,411
Less: income taxes 4,873 4,566 3,076 3,416
Net income $8,544 $8,098 $5,180 $5,995

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Interpretation

Current ratio explains the short term liquidity position of the organization. Here Blackwood's liquidity have improved as its current ratio
has improved ...

Solution Summary

Solution calculates Liquidity of Blackwood Company

$2.19