Paragraph V B I UA, EH 00 P + a) Ratio 2020 2019 Trend (Improving or Worsening) Return on equity 10.24% Net profit margin 8% 6% Gross profit margin 40% Quick (Acid test) ratio 1.4773 Inventory turnover 4.1342 Receivable turnover 5.1254 Current ratio 1.6429 2.0455 Long term debt to equity 0.6667 0.7826 Debt ratio 0.5098 0.5241 0.5983 Total Asset Turnover b) 1: The following information is available for DEF Company: 2. 3 h DEF Company Statement of Financial Position For the year ended December 31 5 6 2020 2019 8 cos Assets: Current Assets Cash A/R Inventory Prepaid Expenses Total Current Assets Non-Current Assets PPE, net Intangible Assets Total Non-Current Assets Total Assets $16,500 $15,950 $17,600 $19,800 $15,400 $13,200 $1,100 $550 $50,600 S49,500 2: $112,200 $105,600 55,500 $4,400 $117,700 $110,000 $168,300 $159,500 12 13 15 16 $11,000 $7,700 $19,800 $16,500 $30,800 S24,200 18 19 S55,000 $59,400 $85,800 $83,600 $6,600 S6,600 $75,900 $69,300 $82,500 $75,900 $168,300 $159,500 3: Liabilities: Current Liabilities Accounts Payable Short Term Debt Total Current Liabilities Non-Current Liabilities: Long Term Debt Total Liabilities Equity: Common Shares Retained Earnings Total Equity Total Liabilities and Equity DEF Company Statement of Earnings For the year ended December 31, 2020 Sales (90% on credit) Cost of goods sold Gross margin Selling and Distribution expenses Administrative expenses Depreciation expense Operating income Interest expense Net income before tax Tax expense Net Income 22 23 25 26 V $110,000 $66,000 $44,000 $15,950 $12.100 $4,400 $11,550 $550 $11,000 $2,200 $8,800 28 29 Required: $168,300 $159,500 3 B VUELYMILY Total Liabilities and Equity DEF Company Statement of Earnings For the year ended December 31, 2020 Sales (90% on credit) Cost of goods sold Gross margin Selling and Distribution expenses Administrative expenses Depreciation expense Operating income Interest expense Net income before tax Tax expense Net Income 9 $110,000 $66,000 $44,000 $15,950 $12,100 $4,400 $11,550 $550 $11,000 $2,200 $8,800 Required: 13 a) Fill in the missing information in the chart provided. Show details of your calculations in the space provided. For the "Trend" column only use "improving" or "worsening" or "stable" for your answer. (round to 4 decimal places) (11 marks) 16 b) Provide an overall assessment of the company's liquidity and leverage. In your assessment, explain the relationship between liquidity and leverage. Identify which ratios you used to determine your assessment. (4 marks) 19 11 + Paragraph B I 2 U A EM o a) Ratio 2020 2019 Trend (Improving or Worsening) 23 10.2496 Return on equity 26 8% 6% Net Net profit margin 29 Page 7 of 7 Next Page