Small Business Finance - BUSG 1341- Homework - Chapter 4 Name show the numbers you used to calculate your answers and round to 2 decimal placest if you do not show your calculations and get it incorrect you will receive O points Given the profit loss (income statement) and balance sheet for Walnut Grove Company (last pages), calculate the following 2020 E 2021 ratios and provide interpretation of those ratios (assume all net sales were credit sales): Ratio Calculate the following ratios: Industry Calculations (Numbers Usedy Standard 2020 2021 Answer (round to 2 Answer (round to decimal places) 2 decimal places) Current Ratio 2.0 Quick Ratio 1.1 19.5 Accounts Receivable Turnover Fixed Asset Turnover 2.5 "For 2020 you won't be able to "overage the AR OF TA, SO just use the 2020 numbers without overaging for 2020. DO AVERAGE AS SHOWN IN YOUR TEXTBOOK FOR 20211 Small Business Finance - BUSG 1341- Homework-Chapter 4 b) Is the company sufficiently liquid? in a written explanation describe what each of the liquidity ratios mean and how they compare to industry standards. How does 2021 compare to 2020? c) . Is Walnut Cove using its assets efficiently? In a written explanation describe what the accounts receivable turnover and fued asset turnover means and how they compare to industry standards, and year to year, d) Calculate the following ratios: Industry Calculations (Numbers Used) Ratio 2020 Standard 2021 Answer (round to 2 decimal places) Answer (round to 2 decimal places) Debt-to-equity ratio 1.1 Debt-to-total asset ratio 0.27 Operating profit Margin 0.52 el Evaluate, in complete sentences, the company's leverage and profitability ratios, and compare to industry standards and to previous years. Walnut Grove Company Income Statement Data From January 1 through December 31, 2020 and 2021 Year 2020 $422.500 4.600 417.900 95,020 322 880 Year 2021 $ 428,300 8.900 419.400 100 400 319.000 Account Gross Sales Less returns Net sales Cost o opods sold Gross profit Operating expenses Administration Advertising Overhead Operating income Interest Earnings before taxes Taces Net income 63.760 36 114 32.400 190 606 8.000 182,606 27391 $ 156 215 84350 38.400 35 600 160,650 10500 150, 150 22523 $ 127 828 Small Business Finance - BUSG 1341- Homework-Chapter 4 Year 2021 21,800 8.670 22,345 42000 900 1,300 97015 1.000 Walnut Grove Company Balance Sheet Data As of December 31, 2020 and 2021 Category Year 2020 Current assets Cash 15,025 Notes receivable 4,000 Accounts receivable 17 650 Inventory 30,200 Prepaid insurance Prepaid legal 1,280 Total current assets 69, 155 Fixed assets Land 30,000 Buildings 150,000 Accumulated depreciation (50.0001 Equipment 98250 Accumulated depreciation (25.400) Totalfixed assets 161 850 Total assets 231 005 Current liabilities Accounts payable 34,250 Notes payable 18,800 Total current abilities 52 850 Long-term debt Mortgage payable 64 000 Bank loan payable 22.000 Total long-term debt 36,000 Totalla es 139,850 Owner's equity 92.155 Total abilities and owner's equity 231.005 30.000 150,000 (53.000) 58.250 (32500) 152.750 249 765 32,000 15 300 47,300 62000 35 000 97000 144 300 105455 27E