Question 65 View Policies Current Attempt in Progress Sundry Ltd. is a thriving company. The Board of Directors wants to declare a cash dividend. The balance sheet of Sundry Ltd. is as follows (in thousands of dollars): 2020 2019 Assets Current Cash Accounts receivable Inventories Prepaid expenses $ 67,834 $62,595 98,666 96,242 1,35,836 1,35,519 8,403 6,635 3,10,739 3,00,991 5,45,574 5,40,203 28,881 24,842 $885,194 $866,036 Property, plant and equipment Long-term investments Total Assets Liabilities and Shareholders' Equity Current Bank indebtedness Accounts payable Current portion of long-term debt $ 74,015 $107,018 84,637 1,00,289 1,693 32,482 1,60,345 2,39,789 2,88,801 1,43,795 oron 0451 Long-term debt UniULIS Lyuily 46:20 Hide Timer Current Bank indebtedness $ 74,015 $107,018 Accounts payable 84,637 1,00,289 Current portion of long-term debt 1,693 32,482 1,60,345 2,39,789 Long-term debt 2,88,801 1,43,795 Deferred income taxes 60,528 84,563 Bonds payable 39,456 64,617 5,49,130 5,32,764 Shareholders' equity Common shares 2,14,962 2,10,709 Retained earnings 1,21,102 1,22,563 3,36,064 3,33,272 Total Liabilities & Shareholders' Equity $885,194 $866,036 (e) Would you recommend that a dividend be declared for 2020? Explain. Support your conclusion with reference to the ratios. Current Ratio Quick Ratio Net Debt as a Percentage of Total Capitalization 2020 2019 1.9 1.3 1.0 0.7 50% 46% Sundery reported net loss of $1,461 because balance in retained earnings decreased. cal expense Taxes (30%) Net income 20 77 180 22 56 130 45:51 Hide Timer 64 150 56 130 (b) Write a brief analysis of the two companies based on the information given and the ratios calculated. Be sure to discuss issues of short-term liquidity, activity, solvency, and profitability. Which company appears to be the better investment for the shareholder? Explain. Which company appears to be the better credit risk for the lender? Explain. Is there any other information you would like to have to complete your analysis? i. Current ratio ii. Accounts receivable turnover iii. Inventory turnover iv. Debt to equity V. Interest coverage vi. Gross margin vii. Profit margin viii. Return on assets ix. Return on equity A-Tec Bi-Sci 2020 2019 2020 2019 3.09 1.96 5.20 4.60 11.34 times 9.29 times 11.36 times 12.00 times 10.87 times 9.00 times 8.67 times 9.00 times 50.0 % 110.0 % 13.85 9.45 34.2% 30.8 % 27.2% 25.0% 9.5% 10.0 % 12.0% 10.8% 29.1% 23.9% 34.1 % 33.3% 62.1% 65.0% 38.5% 38.2 % 1 BI T T'I E 11E 1 1 O Word(s) Question 65 View Policies Current Attempt in Progress Sundry Ltd. is a thriving company. The Board of Directors wants to declare a cash dividend. The balance sheet of Sundry Ltd. is as follows (in thousands of dollars): 2020 2019 Assets Current Cash Accounts receivable Inventories Prepaid expenses $ 67,834 $62,595 98,666 96,242 1,35,836 1,35,519 8,403 6,635 3,10,739 3,00,991 5,45,574 5,40,203 28,881 24,842 $885,194 $866,036 Property, plant and equipment Long-term investments Total Assets Liabilities and Shareholders' Equity Current Bank indebtedness Accounts payable Current portion of long-term debt $ 74,015 $107,018 84,637 1,00,289 1,693 32,482 1,60,345 2,39,789 2,88,801 1,43,795 oron 0451 Long-term debt UniULIS Lyuily 46:20 Hide Timer Current Bank indebtedness $ 74,015 $107,018 Accounts payable 84,637 1,00,289 Current portion of long-term debt 1,693 32,482 1,60,345 2,39,789 Long-term debt 2,88,801 1,43,795 Deferred income taxes 60,528 84,563 Bonds payable 39,456 64,617 5,49,130 5,32,764 Shareholders' equity Common shares 2,14,962 2,10,709 Retained earnings 1,21,102 1,22,563 3,36,064 3,33,272 Total Liabilities & Shareholders' Equity $885,194 $866,036 (e) Would you recommend that a dividend be declared for 2020? Explain. Support your conclusion with reference to the ratios. Current Ratio Quick Ratio Net Debt as a Percentage of Total Capitalization 2020 2019 1.9 1.3 1.0 0.7 50% 46% Sundery reported net loss of $1,461 because balance in retained earnings decreased. cal expense Taxes (30%) Net income 20 77 180 22 56 130 45:51 Hide Timer 64 150 56 130 (b) Write a brief analysis of the two companies based on the information given and the ratios calculated. Be sure to discuss issues of short-term liquidity, activity, solvency, and profitability. Which company appears to be the better investment for the shareholder? Explain. Which company appears to be the better credit risk for the lender? Explain. Is there any other information you would like to have to complete your analysis? i. Current ratio ii. Accounts receivable turnover iii. Inventory turnover iv. Debt to equity V. Interest coverage vi. Gross margin vii. Profit margin viii. Return on assets ix. Return on equity A-Tec Bi-Sci 2020 2019 2020 2019 3.09 1.96 5.20 4.60 11.34 times 9.29 times 11.36 times 12.00 times 10.87 times 9.00 times 8.67 times 9.00 times 50.0 % 110.0 % 13.85 9.45 34.2% 30.8 % 27.2% 25.0% 9.5% 10.0 % 12.0% 10.8% 29.1% 23.9% 34.1 % 33.3% 62.1% 65.0% 38.5% 38.2 % 1 BI T T'I E 11E 1 1 O Word(s)