Required information Use the following financial statements for questions 1 through 5: Manutech Ltd Income Statement Year Ended December 31 2019 Net sales $ 1,470,000 Variable Costs 882,000 Contribution Margin $ 588,000 Fixed Costs 177,000 Operating income (EBIT) $ 411,000 Interest expense 56,200 Earnings before taxes (EBT) $ 354,800 Income tax expense 106,440 Earnings after taxes (EAT) $ 248,360 2018 $ 1,200,000 720,000 $ 480,000 114,000 $ 366,000 53,600 $ 312,400 93,720 $ 218,680 Manutech Ltd Statement of Financial Position Year Ended December 31 2018 Manutech Ltd Statement of Financial Position Year Ended December 31 2019 Assets Current Assets Cash $ 8,360 Accounts Receivable 150,000 Merchandise Inventory 112,000 Total Current Assets $ 270,360 Property, Plant and Equipment 1,555,000 Accumulated Depreciation (455.000) Property, Plant and Equiment (net) $ 1,100,000 Intangible Assets 120,000 Total Assets $ 1,490,360 79,500 105,000 90,000 $ 274,500 1,255,000 (290,000) $ 965,000 120,000 $ 1,359.500 72,500 20,000 Liabilities & Shareholder's Equity Current Liabilities Accounts Payable Accrued Liabilities Bank Loan Total Current Liabilities Mortage Payable Total Liaibilities Shareholder's Equity Common Shares (10,000 issued) Retained Earings Total Shareholder's Equity Total Liab & Shareholder's Equity $ 65,000 15,000 85,000 $ 165,000 650,000 $ 815,000 92,500 670,000 $ 762,500 100,000 575,360 $ 675,360 $ 1,490,360 100,000 497,000 $ 597000 $ 1,359,500 Manutech Ltd had a good year in 2019. Sales were up significantly and are expected continue to grow in 2020. The company has hired you as their new financial analyst and they want you to finish creating the year-end reporting package for the owner Specifically, you need to complete the table of ratios your predecessor started and comment on how the company is doing compared to industry averages. You also need to create the Statement of Cash Flows for 2019. Finally, they're a little concerned about the impact their high rate of growth is having on the financial stability of the company. They ask you to compare company results to industry results using the DuPont analysis, calculate the various degrees of leverage and look at required new funding for next year, given their sales projections Question 1 - Ratio Analysis (10 marks) Complete the following table of ratios for the 2019 results of Manutech Ltd. To complete the table, you will need the following information: All sales are on credit. The income statement is formatted using the Contribution Margin approach. For those calculations that need it, the cost of goods sold is $794.000 The company has traditionally ignored Intangible Assets in the Capital Asset Turnover calculation. (Use only PP&E for that calculation) Enter all numbers to three (3) decimal places (this will ensure proper marking by Connect). Be sure to indicate the correct label and how the company is doing against the industry measure for ALL ratios, not just the ones that you calculate Calculation for Choose the Industry Better Ratio Name Manutech Ltd correct label Measure or worse? Profit margin 16.9 (Click to select) 151 (Click to select) Return on assets Click to select) 12.1 (Click to select) Return on equity (Click to select) 37.5 (Click to select) Receivables turnover Click to select 8.6 (Click to select) Average collection period 37.2 (Click to select) 42.4 (Click to select) Inventory turnover Click to select) 9.1 (Click to select) Accounts payable 122 Click to select) turnover 8.5 Click to select) Accounts payable period Click to select) 42.9 (Click to select) 5302 Enter all numbers to three (3) decimal places (this will ensure proper marking by Connect). Be sure to indicate the correct label an how the company is doing against the industry measure for ALL ratios, not just the ones that you calculate. Calculation for Choose the Industry Better Ratio Name Manutech Ltd correct label Measure or worse? Profit margin 16.9 (Click to select) 15.1 (Click to select) Return on assets (Click to select) 12.1 Click to select) Return on equity (Click to select) 37.5 (Click to select) Receivables turnover (Click to select) 8.6 (Click to select) Average collection period 372 (Click to select) 42.4 (Click to select) Inventory turnover (Click to select) 9.1 (Click to select) Accounts payable 12.2 turnover Click to select) 8.5 (Click to select) Accounts payable period (Click to select) 42.9 (Click to select) Capital asset turnover (Click to select) 24 (Click to select) Total asset turnover 0.986 (Click to select) 0.8 [Click to select) Current ratio 1639 (Click to select) 2 (Click to select) Quick ratio (Click to select) 1.5 (Click to select) Debt to Total Assets 0.547 (Click to select) 0.41 (Click to select) Times interest earned (Click to select) 4.521 (Click to select) Required information Debt to Total Assets 0.547 Times interest earned (Click to select) (Click to select) 0.41 4.521 (Click to select) (Click to select) Question 2 - DuPont Analysis (5 marks) Using the three components of the DuPont method, compare the 2019 results of Manutech Ltd to the industry averages for 2019. Discuss the source of any competitive advantage Manutech has compared to industry average 20437