Manutech Ltd.'s industrial product sales were down in 2014. Fortunately, after investing in a customer relationship management system, it was able to turn its operations around in 2015. Selected financial statements follow:

Additional information for 2015:
1. Assume all sales were credit sales.
2. Manutech has no bad debts and no allowance for doubtful accounts.
3. Property, plant, and equipment increased in 2015 by the $300,000 cost of a new customer relationship management system and decreased by additional accumulated depreciation for the year of $165,000.
4. $20,000 of the mortgage was repaid in 2015.
5. Cash dividends paid during the year amounted to $170,000.
Instructions
(a) Using vertical analysis, calculate the percentage of the base amount for the income statement for 2014 and 2015. Use the results to answer the following question from management: "We know that the sales volume has increased, but we don't know if gross profit and profit are increasing in proportion to sales." Identify the primary reason(s) for the change between the two years.
(b) Calculate the various liquidity ratios for 2015 and compare the company's results with the industry average. The industry average for the current ratio is 2.0:1, for the average collection period, it is 28 days, and the industry average for days in inventory is 40 days.
(c) Calculate the various solvency ratios for 2015 and compare the company's results with the industry average. The industry average for debt to total assets is 50% and that for times interest earned is 5.0 times.
(d) Calculate the various profitability ratios for 2015 and compare the company's results with the industry average. The industry average for gross profit margin is 44.5%, and for the profit margin it is 15.1%. Similarly, the industry average for asset turnover is 0.8 times and for return on assets it is 12.5%.
(e) After a review of the financial statements, the vice-president is surprised that the cash balance reported on the statement of financial position at year end is not higher, since financial performance improved and net cash provided by operating activities was determined to be $355,500. Prepare the investing and financing activities sections of the statement of cash flows for 2015 to explain where the cash has been used.

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MANUTECH LTD Income Statement Year Ended December 31 $1,100,000 Profit from operations Interest expense Profit before income tax Income tax expense Statement of Financial Position 30,000 150,000 Merchandise inventory 90,000 Total current assets Property, plant, and equipment (net) $1,512,000 ,359,500 Liabilities and Shareholders 65,000 72,500 Mortgage payable- current portion Total current liabilities Total liabilities Common shares, 10,000 shares issued 100,000 Total shareholders equity Total liabilities and shareholders' equity $1,359,500