Question 1 [5 points] The following financial statements are for Stake Technology Inc. Stake Technology Inc. Income Statement For Years Ended December 31, 2014, 2013, and 2012 2014 2013 2012 Sales 1,442,200 1,332,100 1,119,600 Cost of goods sold 397,200 458,600 539,100 Gross profit from sales 1,045,000 873,500 580,500 Operating expenses 189,400 171,900 160,900 Operating income 855,600 701,600 419,600 Interest expense 10,450 9,100 8,300 Income before taxes 845,150 692,500 411,300 Income taxes 133,800 149,700 163,200 Net income 711,350 542,800 248, 100 Stake Technology Inc. Balance Sheet December 31, 2014, 2013, and 2012 Assets 2014 Cash 34,600 Short-term investments 86,000 Accounts receivable, net 33,500 Merchandise inventory 15,000 Prepaid expenses 8,500 Notes receivable, due in 2018 4,000 Property, plant and equipment, net 179,000 Total assets 360,600 Liabilities and Equity Accounts payable 18,500 Salaries payable 15,000 Income taxes payable 24,250 Long-term note payable secured by mortgage on plant assets 20,000 Share capital 130,000 Retained earnings 152,850 Total liabilities and equity 360,600 2013 35,400 101,000 36,100 13,300 7,300 4,500 180,000 377,600 2012 37,100 95,000 41,700 12,100 6,600 5,000 157,000 354,500 21,300 13,700 26,250 26,000 160,000 130,350 377,600 26,400 13,500 31,900 25,000 160,000 97,700 354,500 Compute the acid-test ratio below, and indicate whether the change from year to year is favourable or unfavourable. For your analysis, assume that all other things have remained constant. Apply your analysis in very general terms. All values should be accurate to at least two decimal places. Ratio 2014 2013 Measure of Analysis Acid-test ratio (select one) (select one)