Part 1: Ratio Analysis calculate the following ratios
Part 2: Perform a vertical analysis of statement of financial position & Income statement
Part 3: Perform a Horizontal Analysis of statement of Financial Position for 2015 and 2014 & Income statement for 2015
Instructions: 1. On pages three and four, you will find condensed statement of financial position and income statement data for Waterloo Corporation. 2. Use the same information to answer all the three parts. 3. Part 1: a. In Section (a): i. Calculate the indicated ratios for both the years 2015 and 2014. ii. Show detailed calculations with respect to both the numerator and denominator, and then the result. (E.g. (10+10+10)/3) = 10 iii. If the result is only shown, marks will be deducted. b. In Section (b): i. Compare performance of each of the ten ratios between the two years 2014 and 2015. Indicate 'Better' or 'Worse', as applicable for 2015. 4. Part 2: Conduct a vertical analysis for both the Statement of Financial Position and the Income Statement. 5. Part 3: Conduct a horizontall analysis for both the Statement of Financial Position and the Income Statement. a. Statement of Financial Position for 2015 and 2014 b. Income Statement for 2014 Waterloo Corporation Statement of Financial Position 31-Dec 2015 2014 2013 Assets Cash $32,000 $19,000 $10,000 Accounts Receivable (net) 95,000 70,000 53,000 Inventory 81,000 71,000 53,000 Other current assets 65,000 49,000 61,000 Long-term investments 120,000 76,000 50,000 Property, Plant & Equipment (net) 598,000 345,000 315.000 Total Assets $991,000 $630,000 $542,000 $71,500 245.000 316,500 $56,000 75.000 131,000 $65,000 78,000 143,000 Liabilities & Shareholders' Equity Liabilities Current Liabilities Non-current liabilities Total Liabilities Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Shareholders Equity $436,500 238.000 674.500 $319,000 $269,000 180.000 130.000 499,000 399.000 $991,000 $630,000 $542,000 Waterloo Corporation Income Statement Year Ended December 31 2015 Sales $928,000 Less: Sales returns and 58,000 allowances Net Sales 870,000 Cost of goods sold 478,000 Gross Profit 392,000 Operating Expenses 266,000 Profit from operations 126,000 Interest expense 28.500 Profit before income tax 97,500 Income tax expense 21.250 Profit $76,250 2014 $840,000 43.000 797,000 465,000 332,000 256,000 76,000 10.750 65,250 16.250 $49,000 Additional information: 1. The allowance for doubtful accounts was: 2013 $8,500 2014 $7,000 2015 $10,500 2. Assume 94% of net sales were credit sales. 3. Net cash provided by operating activities was: 2014 $120,000 2015 $126,000 2015 2014 1. Current ratio 2. Days Sales Outstanding 3. Days in Inventory 4. Debt to total assets 5. Times interest earned 6. Cash total debt coverage 7. Gross profit Margin 8. Profit margin 9. Asset turnover 10. Return on assets (b) Compare the ratios between 2015 and 2014 and comment if the performance in 2015 was 'better' or 'worse'. (5 marks) Better or Worse Ratio Current ratio Receivables Turnover Inventory Turnover Debt to total assets Times Interest Earned Cash Total Debt Coverage Gross profit Margin Profit margin Asset turnover Return on assets Waterloo Corporation Statement of Financial Position 31-Dec 2015 2014 Assets Cash Accounts Receivable (net) 2013 Inventory Other current assets Long-term investments Property, Plant & Equipment (net) Total Assets Liabilities & Shareholders' Equity Liabilities Current Liabilities Non-current liabilities Total Liabilities Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Shareholders Equity 2014 Waterloo Corporation Income Statement Year Ended December 31 2015 Sales Less: Sales returns and allowances Net Sales Cost of goods sold Gross Profit Operating Expenses Profit from operations Interest expense Profit before income tax Income tax expense Profit Waterloo Corporation Statement of Financial Position 31-Dec 2015 2014 Assets Cash Accounts Receivable (net) Inventory Other current assets Long-term investments Property, Plant & Equipment (net) Total Assets Liabilities & Shareholders' Equity Liabilities Current Liabilities Non-current liabilities Total Liabilities Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Shareholders' Equity Waterloo Corporation Income Statement Year Ended December 31 2015 Sales Less: Sales returns and allowances Net Sales Cost of goods sold Gross Profit Operating Expenses Profit from operations Interest expense Profit before income tax Income tax expense Profit
