Calculate liquidity solvency and profitability ratios between 2 companies.

ARROW LTD. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2021 CANADIAN DOLLARS (millions of dollars) Revenue Sales Revenue * Rent Revenue Interest Revenue Other Revenues Total revenues $ 1,071 451 302 82 $ 1,906 Operating expenses Cost of Goods sold Wages expense Salary expense Benefit expense Research and development expense Repairs and maintenance expense Sales and distribution costs expense Depreciation expense - equipment Depreciation expense - vehicles Depreciation expense - furniture Depreciation expense - office building Insurance expense Property taxes expense Food and beverage expense Supplies expense Interest expense Information technology expense Advertising expense Total operating expenses Profit before income tax Income Tax expense Profit 389 261 130 161 35 80 101 29 14 1 8 5 65 86 56 62 10 263 1,756 150 38 112 * Denotes all of these sales were made on credit ARROW LTD. STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2021 CANADIAN DOLLARS (millions of dollars) ASSETS Current assets Cash Short-term investments Accounts receivable Inventory Spare parts and supplies inventory Prepaid Maintenance Prepaid expenses Total current assets $ 1,636 544 287 70 77 320 50 $ 2,984 Investments 132 84 3,777 Property plant, and equipment Land Office Building Less: Accumulated depreciation Equipment Less: Accumulated depreciation Vehicles Less: Accumulated depreciation Furniture Less: Accumulated depreciation Total property, plant and equipment $ 4,043 266 2,272 497! 581 126 153 31 1,775 455 122 6,213 Intangible assets Trademark Patent Total intangible assets Total Assets 53 37 90 9,419 Liabilities and Shareholders' Equity Current Liabilities Accounts payable Accrued liabilities Uneamed Revenue Current portion of bank loan and mortgage payable Income Tax payable Total Current Liabilities 314 188 452 401 536 1,891 Non-current liabilities Bank loan payable Mortgage Payable Bond payable Total Non-current liabilities 515 34 1,234 2,095 Total Liabilities 3,986 Shareholders' Equity Preferred Shares ** Common Shares *** Retained Eaming Total Shareholders' Equity 428 814 4,191 5,433 Total liabilities and shareholders' equity 9,419 ** There were no preferred dividends declared this year. *** The Weighted Average number of common shares outstandi 20.000.000 The Market price per common share is : 45 ROOT LTD. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2021 CANADIAN DOLLARS (millions of dollars) $ Revenve Sales Revenue * Rent Revenve Interest Revenve Other Revenues Total revenues 1,165 546 212 66 $ 1,989 365 317 120 102 38 94 182 Operating expenses Cost of Goods sold Wages expense Salary expense Benefit expense Research and development expense Repairs and maintenance expense Sales and distribution costs expense Depreciation expense - equipment Depreciation expense - vehicles Depreciation expense - furniture Depreciation expense - office building Insurance expense Property taxes expense Food and beverage expense Supplies expense Interest expense Information technology expense Advertising expense Total operating expenses Profit before income tax Income Tax expense Profit 00 13 4 10 8 7 58 56 67 33 28 305 1,807 182 46 136 * Denotes all of these sales were made on credit ROOT LTD. STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2021 CANADIAN DOLLARS (millions of dollars) ASSETS S Current assets Cash Short-term investments Accounts receivable Inventory Spare parts and supplies inventory Prepaid Maintenance Prepaid expenses Total current assets 1,767 871 316 58 93 222 26 S 3,353 Investments 247 139 $ S 3,990 Property plant, and equipment Land Office Building Less: Accumulated depreciation Equipment Less: Accumulated depreciation Vehicles Less: Accumulated depreciation Furniture Less: Accumulated depreciation Total property, plant and equipment 4,364 374 2,331 446 767 139 183 41 1,885 628 142 6,784 Intangible assets Trademark Patent Total intangible assets 65 25 90 Total Assets 10.474 Liabilities and Shareholders' Equity 952 296 525 458 443 2,674 Current Liabilities Accounts payable Accrued liabilities Unearned Revenve Current portion of bank loan and mortgage payable Income Tax payable Total Current Liabilities Non-current liabilities Bank loan payable Mortgage Payable Bond payable Total Non-current liabilities Total Liabilities Shareholders' Equity Preferred Shares ** Common Shares *** Retained Earning Total Shareholders' Equity 590 297 2,296 3.183 5,857 264 882 3,471 4,617 Total liabilities and shareholders' equity 10,474 ** There were no preferred dividends declared this year. *** The Weighted Average number of co: 25,000,000 The Market price per common share 20 Arrow Root Which is better? Liquidity Working Capital: Current Assets - Current Liabilities Current Ratio: Current Assets Current Liabilities Quick Ratio: Cash + Short-term Investments + Accounts Receivable Current Liabilities Receivable Turnover: Net Credit Sales Accounts Receivable Average Collection Period: 365 Receivable Turnover Inventory Turnover: Cost of Goods Sold Inventory ayo Days in Inventory: 365 Inventory Turnover Solvency Debt to Total Assets: Total Liabilities Total Assets Times Interest Earned Profit+Interest Expense+Income Tax Expense Interest Expense Debt to Total Equity: Total Liabilities Total Equity Profitability Profit Margin: Profit Net Sales ROA: Profit Total Assets Asset Turnover: Net Sales Total Assets Earnings Per Share: Profit - Preferred Dividends Weighted Average Number of Shares Price Earnings: Market Price per share EPS Return on Common Shareholder's Equity Profit - Preferred Dividends Common Shareholder's Equity Assess and comment on the liquidity, solvency and profitablility ratios you calculated above. Which company would you invest in and why? Page 2