Balance Sheet as at December 31 ($' million) 2019 2020 33 $ 27 52 61 Assets: Cash and cash equivalent Accounts receivable Inventory...... Plant and equipment Less accumulated depreciation.. 41 40 531 460 330 291 Total assets.. $ 327 $ 297 $44 $48 21 22 17 21 Liabilities and stockholders' equity: Accounts payable. Wages payable. Income taxes payable Bonds payable due Dec 2028 Deferred taxes payable due April 2023. Common stock, $0.50 par, outstanding. Retained earnings. Total liabilities and stockholders' equity...... 65 60 16 18 71 70 93 58 $327 $297 Income Statement for the year ended December 31, 2020 ($' million) Sales revenue $515 Cost of goods sold 312 Gross margin 203 Selling and administrative expense (inclusive of depreciation expense) 134 Net operating income 69 Income taxes 21 Net income $48 During the year, $1 million worth of stock dividends were paid out to the common shareholders and there is no preferred stock. There was no disposal of assets during the Required: (a) Prepare the Statement of Cash flows for Wallace-Lague Corporation for the year ended December 31, 2020 using the Indirect Method. (15 marks) year. (b) What is Lague's Free Cash Flow? (3 marks) 2 (c) Briefly discuss Lague's Cash flow position. (5 marks) (d) Compute the following ratios for the year 2020 Acid test (Quick ratio) (6) Accounts receivable turnover (days) Inventory turnover (days) Earnings per share of common stock Debt ratio (%) (iv) (v) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (2 marks) (vi) Return on common stockholders' equity (%) (vill) Reinvestment ratio (%) (vii) Dividend payout ratio (%) (ix) Operation index ratio (%) (x) Cash flow to revenue ratio (%) (0) Explain why liquidity and solvency ratios are important factors in analyzing a company like Wallace-Lague Corporation. (4 marks)