Ed Cowen was recently hired by Tuxedo Air Inc to assist the organization with its financial planning and evaluate its performance. Ed graduated from university six years ago with a finance degree. He has been employed in the finance department of a TSX100 company then. Tuxedo Air was founded 12 years ago by friends Mark Taylor and Jack Rodwell. The organization manufactured and sold light airplanes over this period. Its products have received high reviews for safety and reliability. The organization has a niche market in that it sells primarily to individuals who own and fly their-own airplanes. The company has two models: the sparrow, which sells for $53,000, and the vulture, which sells for $78,000.

Although the company manufactures aircrafts, its operations are different from commercial aircraft companies. Tuxedo Air builds aircraft to order. By using prefabricated parts, the organization can complete the manufacture of an airplane in only five weeks. The organization 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.

Mark and Jack have provided the following financial statements. Ed has gathered the industry ratios for the light manufactured industry.

Light Airplane Industry Ratios Lower Quartile Median Upper Quartile Current ratio 0.50 1.43 1.89 Quick ratio 0.21 0.38 0.62 Cash ratio 0.08 0.21 0.39 Total asset turnover 0.68 0.85 1.38 Inventory turnover 4.89 6.15 10.89 Receivable turnover 6.27 9.82 14.11 Total debt ratio 0.44 0.52 0.61 Debt-equity ratio 0.79 1.08 1.56 Equity multiplier 1.79 2.08 2.56 Times interest ratio 5.18 8.06 9.83 Cash coverage ratio 5.84 8.43 10.27 Profit margin 4.05% 6.98% 9.87% Returns on assets 6.05% 10.53% 13.21% Returns on equity 9.93% 16.54% 26.15% 1) Using the financial statements provided for Tuxedo Air Inc., calculate each of the ratios listed I in the table for the light airplane industry. 2) Mark and Jack agree that a ratio analysis can provide a measure of the company's performance. They have chosen Bombardier as an aspirant company. Would you choose Bombardier as an aspirant company? Why or why not? 3) Compare the performance of Tuxedo Air to the industry. For each ratio, comment on why it might be viewed as positive or negative relative to the industry.Tuxedo Air Inc. 2018 Statement of Comprehensive Income Sales $ 36,599,300 Cost of goods sold $ 26,669,496 Other expenses $ 4,641,000 Depreciation 1,640,200 EBIT 3,648,604 AA AA Interest 573,200 Taxable Income 3,075,404 Taxes (40%) $ 1,230, 162 Net income 1,845,242 Dividends 560,000 Add to retained earnings $ 1,285,242 ITuxedo Air Inc. 2018 Statement of Financial Position Assets Liabilities and Equity Current assets Current liabilities Cash 396,900 Accounts payable $ 844,550 Accounts Receivable 637,560 Notes payable 1,928,500 Total current liabilities 2,773,050 Inventory 933,400 Total current assets S 1,967,860 Long-term debt 5,050,000 Fixed assets Owner's equity Net plant and equipment $ 15,411,620 Common stock 322,500 Retained earnings 9,233,930 Total equity 9,556,430 Total assets $ 17,379,480 Total liabilities and Equity 17,379,480 Light mlane