Cruz Burgers Inc.’s financial statements for the year ended December 31, 2020, are shown below:

                             CRUZ BURGERS INC.
                       Income Statement
             For the Year Ended December 31, 2020
Net sales ............................................................... $330,000
Cost of goods sold .................................................190,000
Gross margin ......................................................... 140,000
Operating expenses
Selling expenses ..................................................... 40,000
Administrative expenses ....................................... 23,000
Interest expense ...................................................... 6,000
Total operating expenses ..................................... 69,000
Operating income ................................................. 71,000
Income taxes (30%) .............................................. 21,300
Net income ......................................................... $ 49,700

Required

1. Perform a horizontal analysis of the comparative balance sheets. Round all answers to one decimal place. Comment on the analysis.

2. Perform a vertical analysis of the income statement. Round all answers to one decimal place. The industry standards are a gross margin of 45 percent and net income of 15 percent. Comment on the analysis.

3. Calculate each of the following ratios for the year ended December 31, 2020. Round all answers to two decimal places. The industry standards are provided in parentheses for some of the ratios.

a. Current ratio (2.17)

b. Acid-test ratio

c. Inventory turnover

d. Days’ sales in inventory

e. Accounts receivable turnover

f. Days’ sales in receivables

g. Debt ratio (0.47)

h. Debt/equity ratio

i. Times-interest-earned ratio

j. Return on sales

k. Return on assets

l. Return on common shareholders’ equity

m. Price–earnings ratio—the market price per share is $9.00 at year-end, when dividends were paid (14.00)

n. Dividend yield (4.15%)

4. Comment on your calculations for Cruz Burgers Inc. Include comments for those ratios for which industry standards were provided.

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CRUZ BURGERS INC. Balance Sheet December 31, 2020 and 2019 2020 2019 Assets Cash $ 21,600 $ 15,600 Accounts receivable 33,050 21,000 Inventory 38,000 42,000 Prepaid expenses 1,000 1,500 Property, plant, and equipment 170,000 157,000 Less: Accumulated amortization 34,000 24,000 Goodwill 15,000 15,000 Total assets $244,650 $228,100 Liabilities Accounts payable $ 15,000 $ 18,500 Note payable (due in 30 days) 2,000 3,500 Mortgage payable 40,000 45,000 Total liabilities 57,000 67,000 Shareholders' equity Preferred shares (8,000 shares; $2.00, callable at $15.00 per share) 48,000 48,000 Common shares (2020-12,000 shares; 2019-8,000 shares) 81,000 65,000 Retained earnings 58,650 48,100 Total shareholders' equity 187,650 161,100 Total liabilities and shareholders' equity $244,650 $228,100