Hawk's Limited Statement of Financial Position December 31, 2015 and 2014 Current assets Cash Short-term investments Accounts receivable, net Inventory Prepaid expenses 2015 2014 $10,000 $5,000 2,000 5,000 25,000 18,000 47,000 45,000 4,000 3,000 Total current assets $88,000 $76,000 Property, plant, and equipment, net 33,300 35,000 Other assets 27,000 22,500 Total assets $148,300 $133,500 Current liabilities Short-term borrowings Accounts payable Total current liabilities Long-term debt Total liabilities $ 28,400 $13,900 20,000 22,500 $48,400 $36,400 37,500 33,000 $85,900 $69,400 Shareholders' equity Common shares (10,000 shares outstanding) $20,000 $20,000 Retained earnings 42,400 44,100 Total shareholders' equity $62,400 $64,100 Total liabilities and shareholders' equity $148,300 $133,500 Additional information for 2015: Profit before tax Income tax expense Profit after tax Operating profit Interest expense Depreciation expense Cost of goods sold Sales revenue** Market Price per Share **Credit sales totaled 75% of total sales revenue. Industry averages: current ratio quick ratio debt-to-equity ratio average collection period for receivables inventory turnover price/earnings ratio times interest earned return on equity $7,000 $2,100 $4,900 $22,400 $3,650 $1,700 $136,000 $500,000 $3.50 1.50 1.00 1.63 29.0 days 10.1 X 8.0 3X 8.00% Required: Based on the information provided on the previous page, in the answer boxes provided below, for each of the listed ratios: Calculate Hawk's Limited's ratio values for 2015 (to 2 decimal places). PLEASE NOTE THAT RATIO FORMULAS ARE PROVIDED ON THE LAST PAGE OF THIS EXAM (8 marks) a) b) Indicate whether Hawk's Limited is performing 'better' or 'worse' than the industry average by checking (V) the appropriate box. (4 marks) c) Interpret the ratio: Briefly explain why the ratio indicates Hawk's Limited is performing 'better' or 'worse'. (4 marks) (a) Calculation (b) (V) or (V) Better Worse Current ratio Quick ratio Average days to collect receivables Inventory turnover Price/earnings ratio Debt-to-equity ratio Return on equity Times interest earned (c) Interpretation wlu.ca/d21/im Th