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- Wally is impressed by the quality of your analysis. He needs some additional help this time with evaluating how one of his company's - Timmy's Baked Goods (TBG) - is performing. TBG is a chain of bakeries operating across Canada. Wally has asked you to perform some financial statement analysis. He asks that you look at how the company has performed relative to history and industry benchmarks. He wants you to calculate the following ratios for each of 2018, 2019 and 2020, using the data he provides below. Be sure to comment on what you think the results mean. He has also included industry information that you can use in your analysis. Note that for the ROA and ROE, you should use the average total assets and the average total equity in your calculations. For turnover ratios, please also use the average. (e.g., for Accounts Receivable Turnover, take Credit Sales / Average Accounts Receivable for the year). 1. Current ratio 2. Account Receivable turnover days; all sales are credit sales 3. Accounts Payable turnover days 4. Debt ratio 5. Operating Profit margin 6. Return on Assets 7. Return on Equity Timmy's Baked Goods Comparative Income Statement ($M) for the years ended Dec 31, 2017 to Dec 31, 2020 Sales Cost of Goods Sold Gross Profit Selling and Admin Expenses Depreciation Operating Profit Interest Earnings before Taxes Taxes Net Income 2017 2018 2019 2020 $ 57.43 $ 59.89 $ 145.09 $ 158.67 $ 41.94 $ 42.09 $ 101.38 $111.91 $ 15.49 $ 17.80 $ 43.71 $ 46.76 $ 11.47 $ 12.01 $ 20.83 $ 25.11 $ 1.51 $ 2.71 $ 4.31 $ 4.18 $ 2.52 $ 3.08 $ 18.57 $ 17.48 $ 1.88 $ 2.51 $ 7.10 $ 4.94 $ 0.63 $ 0.57 $ 11.47 $ 12.54 $ 0.20 $ 0.18 $ 3.67 $ 4.01 $ 0.43 $ 0.39 $ 7.80 $ 8.53 Timmy's Baked Goods Comparative Balance Sheet ($M) for the years ended Dec 31, 2017 to Dec 31, 2020 2017 2018 2019 2020 Cash $ 2.15 $ 4.11 $ 5.16 $ 7.71 A/R $ 9.00 $ 9.71 $ 16.98 $ 17.08 Inventory $ 3.42 $ 15.93 $ 16.54 $ 15.86 Total Current Assets $ 14.58 $ 29.75 $ 38.67 $ 40.65 Land, Plant & Equipment $ 10.86 $ 32.46 $ 36.84 $ 35.60 Other Assets $ 0.49 $ 1.08 $ 1.68 $ 1.76 Total Assets $ 25.93 $ 63.29 $ 77.19 $ 78.01 A/P Current Portion of LT Debt Total Current Liabilities Long-Term Debt Total Liabilities Shareholders' Equity Total Liabilities and Equities $ 10.75 $ 18.15 $ 22.43 $ 21.99 $ 0.58 $ 3.62 $ 3.75 $ 2.86 $ 11.33 $ 21.76 $ 26.18 $ 24.86 $ 10.56 $ 37.09 $ 38.77 $ 32.40 $ 21.89 $ 58.85 $ 64.95 $ 57.25 $ 4.04 $ 4.43 $ 12.23 $ 20.76 $ 25.94 $ 63.29 $ 77.18 $ 78.01 Industry Benchmarks 1.35 0.25 II 40.12 34.5 50.1 3.5 Current Ratio Cash Ratio Inventory Turnover (days) AR Turnover (days) AP Turnover (days) Fixed Asset Turnover Total Asset Turnover Debt Ratio Times Interest earned Gross Profit Margin Operating Profit Margin Net Profit Margin ROA 1.75 0.5 10.5 28% 12% 7.50% 15.50% ROE 37.50% 2018 2019 2020 Num Den Answer Key - Timmy's Baked Goods Current Ratio 1.37 1.48 1.64 CA CL Net Credit Avg AR, all under 365 Sales 57.01 125.29 0.93 33.57 73.04 COGS Avg AP, all under 365 39.17 72.45 0.73 11.0% 0.84 TL AR Turnover - days AP Turnover - days Debt Ratio Operating Profit Margin ROA ROE TA 5.1% Op Income Net Sales 12.8% 11.1% 93.6% NI 0.9% 9.2% Avg TA 11.0% 51.7% NI Avg TE