C aw Income Statement For Year Ended December 31, 2020 Net sales Cost of goods sold: $1,156,000 Inventory, Dec. 31, 2019 $ 84,860 Purchases 619,840 Goods available for sale $ 704,700 Inventory, Dec. 31, 2020 61,890 Cost of goods sold 642,810 Gross profit from sales $ 513,190 Operating expenses 292,360 Operating profit 220,830 Interest expense 13,300 Profit before taxes $ 207,530 Income taxes 19,814 Profit $ 187,716 Outdoor Waterworks Inc. Balance Sheet December 31, 2020 Assets Cash $ 24,100 Current non-strategic investments Accounts receivable, net Notes receivable Inventory Prepaid expenses Plant and equipment, net Total assets Liabilities and Equity 26,760 53,980 12,460 61,890 6,140 336,020 $521,350 Accounts payable $ 49,600 Accrued wages payable 6,620 Income taxes payable 7,530 Long-term note payable, secured by mortgage on plant 119,700 Common shares, 160,000 shares 201,500 Retained earnings 136,400 < Prev The 2020 financial statements of Outdoor Waterworks Inc. follow: Outdoor Waterworks Inc. Income Statement For Year Ended December 31, 2020 Net sales Cost of goods sold: Inventory, Dec. 31, 2019 Purchases Goods available for sale Inventory, Dec. 31, 2020 Cost of goods sold Gross profit from sales Operating expenses Operating profit Interest expense Profit before taxes Income taxes Profit $1,156,000 $ 84,860 619,840 $ 704,700 61,890 642,810 $ 513,190 292,360 220,830 13,300 $ 207,530 19,814 $ 187,716 Assets Outdoor Waterworks Inc. Balance Sheet December 31, 2020 Cash Current non-strategic investments Accounts receivable, net Notes receivable Inventory Prepaid expenses Plant and equipment, net Total assets Liabilities and Equity Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant Common shares, 160,000 shares Retained earnings Total liabilities and equity $ 24,100 26,760 53,980 12,460 61,890 6,140 336,020 $521,350 $ 49,600 6,620 7,530 119,700 201,500 136,400 $521,350 Assume all sales were on credit. Also assume the long-term note payable is due in 2023, with no current portion. On the December 31, 2019, balance sheet, the assets totalled $442,220, common shares were $201,500, and retained earnings were $113,340. Required: Calculate the following: (Use 365 days in a year. Do not round your intermediate cal places.) a. Current ratio b. Quick ratio c. Days' sales uncollected d. Inventory turnover e. Days' sales in inventory f. Ratio of pledged plant assets to secured liabilities g. Times interest earned h. Profit margin 1. Total asset turnover Return on total assets k. Return on common shareholders' equity to 1 to 1 days times days to 1 times % times % % k Return on common shareholders' equity % Analysis Component: Identify whether the ratios calculated above are favourable or unfavourable to the Industry averages. a. Current ratio b Quick ratio c Days sales uncollected d Inventory turnover e Days sales in inventory Industry Average 1.6.1 1.11 21 days 5 times 70 days 50 times f Ratio of pledged plant assets to secured liabilities 141 g Times interest earned h. Profit margin L Total asset turnover 14 % 23 times Return on total assets 20 % k Return on common shareholders' equity 32.7 % < Prev 2 of 3 Next >