Q.4 Chris Guthrie was recently hired by S&S Air, Inc. to assist the company with its financial planning and to evaluate the company's performance. Although S&S manufactures aircraft, its operations are different from commercial aircraft companies. S&S Air builds aircraft to order. By using prefabricated parts, the company can complete the manufacture of an airplane in only five weeks. The company also receives a deposit on each order, as well as another partial payment before the order is complete. In contrast, a commercial airplane may take one and one-half to two years to manufacture once the order is placed. Chris has been provided the following financial statements. In addition, Chris has gathered the industry ratios for the light plane manufacturing industry. S&S AIR, INC. 2012 Income Statement $36,599,300 26,669,496 4,641,000 1,640,200 Sales Cost of goods sold Other expenses Depreciation EBIT $3,648,604 573,200 $3.075.404 1,230,162 $1,845,242 Interest Taxable Income Taxes (40%) Net Income S&S Air, Inc. 2012 Balance Sheet Assets Liabilities and Equity Current assets Current liabilities $844,550 1,928,500 $396,900 Accounts payable 637,560 Notes payable 933,400 1,967,860 Total current liabilities Cash Accounts receivable Inventory Total current assets $2,773,050 Fixed assets Long-term debt $5,050,000 Net plant and equipment $15,411,620 Shareholder equity Common stock Retained earnings Total equity $17.379.480 Total liabilities and equity $322,500 9,233,930 $9.556,430 $17.379.480 Total assets Light Airplane Industry Ratios Current ratio Quick ratio Total asset Turnover 1.43 0.35 0.85 Inventory Turnover Receivable Turnover Total debt-asset ratio 6.15 Debt-equity ratio Times-interest earned Operating profit margin Returns on Asset Return on Equity 9.82 0.52 1.08 8.06 6.98% 10.53% 16.54% Required: Using the financial statements provided for S&S Air, Calculate each of the ratios listed in the table for the light aircraft industry. Also provide interpretations for these ratios by comparing the performance of S&S Air to the industry. (5 Marks)