Question The comparative balance sheets of Waterways Corporation's Irrigation Installation Division for the years 2019 and 2020 and the income statements for the year 2019 and 2020 are presented below. Additional information: 85% of the sales for Waterways were credit sales. There are 5,000 shares outstanding for both years. This is a private corporation whose shares are not available to the public. WATERWAYS CORPORATION-INSTALLATION DIVISION Balance Sheets December 31 Assets 2020 2019 Current assets $836,100 $24.500 Accounts receivable 679,300 540,400 Work in process 704,300 Inventory 16,600 7,500 Prepaid expenses 76,000 42.300 Total current assets 2312300 1332200 Property, plant, and equipment Land 298,000 298,000 Buildings 450.000 450,000 Equipment 932.100 801,000 Furnishings 40,200 40,200 Accumulated depreciation (486,900) (489.100) Total property, plant, and equipment 1,233,400 1,100,100 Totalt $3,545,200 $2,432,800 Liabilities and stockholders' Equity Current liabilities Accounts payable $158.200 $120,000 Income taxes payable 100,500 79,200 Wages payable 2.000 Interest payable 1,100 Other current abilities 14,600 15,300 Revolving bank loan payable 14.900 Total current l es 293.800 224,500 14,900 293,800 224,500 137,000 430.800 224,500 Revolving bank loan payable Total current liabilities Long-term liabilities Note payable Total liabilities Stockholders' equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 1,250,000 1,864,900 3,114,900 $3,545,700 1,250,000 958,300 2,208,300 $2,432,800 WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statements For the Year Ending December 31 2020 2019 Sales $5,536,343 $4,913,800 Less: Cost of goods sold 3,117,900 2,822,600 Gross profit 2,418,443 2,091,200 Operating expenses Advertising 49,700 47,700 Insurance 401,500 401,500 Salaries and wages 585,400 555,400 Depreciation 71,700 62,700 Other operating expenses 21,200 18,626 Total operating expenses 1,129,500 1,085,926 Income from operations 1,288,943 1,005,274 Other income Gain on sale of equipment 18,200 Other expenses Interest expense (12,000) Income before income tax 1,295,143 1,005,274 Income tax expense 388,543 301,582 Net income $906,600 $703,692 RCES (a) Prepare a horizontal analysis of the income statement using 2019 as the base year. (Do not leave any answer fiele place, e.g. 52.7%. Enter negative amounts using either a negative sign preceding the number e.g. -45 or WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statement udy 2020 2019 Change Percent Sales $5,536,343 $4,913,800 Less: Cost of goods sold 3,117,900 2,822,600 Gross profit 2,418,443 2,091,200 Operating expenses Advertising 49,700 47.700 Insurance 401,500 401,500 Salaries and wages 585,400 555,400 Depreciation 71,700 62,700 Other operating expenses 21,200 18,626 Total operating expenses 1,129,500 1,085,926 1,288,943 1,005,274 Income from operations Other income Gain on sale of equipment 18,200 Other expenses Interest expense (12,000) Income before income tax 1,295,143 1,005,274 Income tax expense 388,543 301,582 Net income $906,600 $ 703,692 (b) Prepare a vertical analysis of the income statement for 2020. (Round percentage values to 1 decimal pla the number e.g. -45% or parentheses e.g. (45)%) WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statement Amount Percent Sales $5,536,343 Less: Cost of goods sold 3,117,900 Gross profit 2,418,443 Operating expenses Advertising 49,700 Insurance 401,500 Salaries and wages 585,400 Depreciation 71,700 Other operating expenses 21,200 Total operating expenses 1,129,500 1,288,943 Income from operations Other income Gain on sale of equipment 18,200 Income from operations 1,288,943 Other income Gain on sale of equipment 18,200 Other expenses Interest expense (12,000) Income before income tax 1,295,143 Income tax expense 388,543 Net income $906,600 Calculate the following ratios for 2020 and indicate whether the ratio is a liquidity, solvency, or profitabilit ratio and Earnings per share to 2 decimal places, e.g. 15.25. Round Average collection period, stockholders' equity ratio and Times interest earned ratio to 1 decimal place, e.g. 15.2 or 15.29 Type (1) Asset turnover ratio times (2) Accounts receivable turnover ratio times (3) Average collection period days (4) Current ratio (5) Debt to assets ratio (6) Earnings per share (7) Profit margin (8) Return on assets ratio (9 Return on.common stockholders.com (1) LITICS (2) Accounts receivable turnover ratio times (3) Average collection period days (4) Current ratio (5) Debt to assets ratio (6) Earnings per share (7) Profit margin (8) Return on assets ratio (9) Return on common stockholders' equity ratio (10) Times interest earned ratio times (d) Comment on your findings. Liquidity : The company's liquidity is Solvency : The company's solvency is very Profitability : The company's profitability is Overall : By all measures the company appears to be both financially Click if you would like to Show Work for this question: Open Show Work