P1888 Cruz Burgers Inc.'s financial statements for the year ended December 31, 2020, are shown below: CRUZ BURGERS INC. Balance Sheet December 31, 2020 and 2019 2020 2019 $ 21,600 33,050 38,000 1,000 170,000 34,000 15,000 $244,650 $ 15,600 21,000 42,000 1,500 157,000 24,000 15,000 $228,100 Assets Cash Accounts receivable Inventory Prepaid expenses Property, plant, and equipment Less: Accumulated amortization Goodwill Total assets Liabilities Accounts payable Note payable (due in 30 days) Mortgage payable Total liabilities Shareholders' equity Preferred shares (8,000 shares: $2.00, callable at $15.00 per share) Common shares (202012,000 shares; 20198,000 shares) Retained earnings Total shareholders' equity Total liabilities and shareholders' equity $ 15,000 2,000 40,000 57.00 $ 18,500 3,500 45,000 67,000 48,000 48,000 81,000 58,650 187,650 $244,650 65,000 48,100 161,100 $228,100 $330,000 190,000 140,000 CRUZ BURGERS INC. Income Statement For the Year Ended December 31, 2020 Net sales Cost of goods sold Gross margin Operating expenses Selling expenses Administrative expenses Interest expense Total operating expenses Operating income Income taxes (30%) Net income 40,000 23,000 6,000 69,000 71.000 21,300 $ 49,700 CRUZ BURGERS INC. Statement of Retained Earnings For the Year Ended December 31, 2020 Retained earnings, January 1, 2020 Add: net income for 2020 $48,100 49,700 97,800 $16,000 Less dividends: Preferred Common Retained earnings, December 31, 2020 23.150 39,150 $58,650 Required 1. Perform a horizontal analysis of the comparative balance sheets. Round all answers to one decimal place. Comment on the analysis. 2. Perform a vertical analysis of the income statement. Round all answers to one decimal place. The industry standards are a gross margin of 45 percent and net income of 15 percent. Comment on the analysis. 3. Calculate each of the following ratios for the year ended December 31, 2020. Round all answers to two decimal places. The industry standards are provided in parentheses for some of the ratios. a. Current ratio (2.17) j. Return on sales b. Acid-test ratio k. Return on assets c. Inventory turnover 1 Return on common d. Days' sales in inventory shareholders' equity e. Accounts receivable turnover m. Price-earnings ratio-the f. Days' sales in receivables market price per share is $9.00 at year-end, when g. Debt ratio (0.47) dividends were paid (14.00) h. Debt/equity ratio n. Dividend yield (4.15%) i. Times-interestearned ratio 4. Comment on your calculations for Cruz Burgers Inc. Include comments for those ratios for which industry standards were provided. Reg. 1 Show percentage to one decimal place. % CRUZ BURGERS INC. Horizontal Analysis of Balance Sheets December 31, 2020 and 2019 CHANGE ASSETS Cash Accounts receivable Inventory Prepaid expenses Property, plant, and equipment Less: Accumulated amortization Goodwill Total assets LIABILITIES SHAREHOLDERS' EQUITY Total liabilities and shareholders' equity Req. 2 CRUZ BURGERS INC. Vertical Income Statement Analysis December 31, 2020 AMOUNT % Reg. 3 Highlight the ratio in yellow Current ratio: a. X.XX b. Acid-test ratio: X.XX c. Inventory turnover: = d Days' sales in inventory: = XX.X e. Accounts receivable turnover: II f. Days' sales in receivables: = XX.X Debt ratio: 11 0.xx h. Debt equity ratio: = 0.xx 1. Times-interest-earned ratio: = XXX j. Return on sales: j. Return on sales: = xx.x% k. Return on assets: xx.x% 1. Return on common shareholders' equity: xx.x% m. Price-earnings ratio: X.XX n. Dividend yield: Req. 4 a. Current ratio: b. Debt ratio: c. Price-earnings ratio: d. Dividend yield: Overall