3 4 The financial statements of Dandy Distributors Ltd. are shown on the "Fcl. Stmts." page. 5 6 7 Required: 1 Based on Dandy's financial statements, calculate ratios for the year ended December 31, 2020. Assume all sales are on credit. Show your work. 8 9 10 2 From these ratios, analyze the financial performance of Dandy. 11 12 13 14 D G M N 1 2 Dandy Distributors Ltd. Income Statement For the Year Ended December 31, 2020 3 4 5 6 2020 2019 $21,133,000 $19,442,360 16,061,080 14,970,617 5,071,920 4,471,743 7 8 9 10 11 12 13 841,000 104,400 153,600 422,660 1,521,660 832,590 95,004 152,064 431,113 1,510,771 14 15 16 17 18 19 Sales, net Less: Cost of goods sold Gross profit Operating expenses Selling Salaries and benefits Delivery Office supplies Warranty Total selling General and administrative Bad debts Depreciation Professional fees Total general and adminstrative Total operating expenses Income (loss) from operations Other income (expenses) Rent revenue Income (loss) before interest and income taxes Interest expense Income (loss) before income taxes Income taxes (recovered) Net income (loss) 633,990 1,176,660 168,900 1,979,550 3,501,210 1,570,710 646,670 1,200,193 157,077 2,003,940 3,514,711 957,032 20 21 22 23 24 25 26 27 28 29 187,000 1,757,710 682,245 1,075,465 247,357 $828. 108 200,090 1,157,122 668,600 488,521 112,360 $376.162 30 31 32 2019 33 34 35 36 37 Dandy Distributors Ltd. Statement of Changes in Equity For the Year Ended December 31, 2020 2020 Retained Common Pref. earnings stock stock (deficit) Balance (deficit) at Jan. 1 $652,000 $19,670 $5,353,112 Stock issued 27,400 Net income (loss) 828,108 Cash dividends declared Preferred (39,300) Common (38,400) Balance (deficit) at Dec. 31 $679,400 $19,670 $6,103,520 Total equity $5,730,250 38 Total equity $6,024,782 27,400 828,108 376,162 39 40 41 42 43 (39,300) (38,400) $6,802.590 (43,230) (38,400) $6,024.782 44 45 46 47 48 49 Dandy Distributors Ltd. Balance Sheet At December 31, 2020 50 Assets Dandy Distributors Ltd. Balance Sheet At December 31, 2020 Assets Current Cash Accounts receivable, net Inventories Plant assets Land Building, net Patents, net Goodwill 2020 $63,000 4,020,000 2,420,000 6,503,000 2019 $20,540 4,221,000 2,468,400 6,709,940 8,624,000 6,537,000 27,300 25,600 15,213,900 $21.716,900 8,541,260 6,929,220 27,300 25,600 15,523,380 $22.233.320 $642,160 110,544 209,520 Liabilities Current Trade accounts payable Estimated current liabilities Estimated warranty liabilities Note payable Dividends payable Interest payable Salaries and benefits payable Sales tax payable Unearned rent Current portion of mortgage payable Corporate income taxes payable $698,000 117,600 194,000 24,200 77,700 14,300 90,000 23,000 19,500 2,237,764 11,110 3,507,174 81,630 14,157 89,100 23,920 16,674 1,621,014 11,443 2,820,163 Non-current Mortgage payable Less: Current portion 13,644,900 (2,237,764) 11,407,136 14,914, 310 15,009,390 (1,621,014) 13,388,376 16,208,538 Total liabilities Stockholders' Equity Common stock, $1 per share Preferred stock, $10 per share Retained earnings (deficit) 679,400 19,670 6,103,520 6,802,590 $21.716,900 652,000 19,670 5,353,112 6,024,782 $22.233320 Total liabilities and S/H equity Dandy Distributors Ltd. Selected Financial Ratios Ozo 2020 industry average 1.9 1.2 a. Current ratio b. Acid-test ratio C. Accounts rec. collection (days) d. Days of sales in inventory e. Revenue operating cycle (days) f. Gross profit ratio g. Operating profit ratio h. Net profit ratio i. Sales to total assets ratio j. Return on total assets ratio k. Return on s/h equity ratio 1. Debt to s/h equity ratio m. Times interest earned n. Earnings (loss) per common share 0. Price-earnings ratio (given) p. Dividend yield per common share (given) 70 52 122 25.7% 8.2% 4.3% 1.0 7.8% 14.2% 4.1 2.4 $1.72 Dandy's ratios 2020 2019 2.4 1.5 79 60 139 23.0% 4.9% 1.9% 0.9 4.2% 6.4% 2.7 1.4 $0.51 23 15 2018 2.7 1.7 94 67 167 22.8% 4.3% 1.6% 0.7 3.4% 5.2% 3.0 1.2 $0.43 12 28 5% 5% 5% 6%