Teddy Bearheart who invested in another company, Wulter's Market, is thinking of investing in ACME Incorporated. You are hired to perform a financial analysis of the company's statements at their October 31, 2020 year-end and compare it to Wulter's Market. ACME Wulter's Market Balance Sheet Balance Sheet October 31, 2020 October 31, 2020 Current Assets Cash $ 433,600 -$ 232,300 $ $ 198,800 Accounts receivable 207,300 $ $ 120,000 121,200 Merchandise inventory Total Current Assets $ 797,900 $ 114,600 $ Store equipment Building Land FA A A $ 360,500 $ 618,800 $ 75,000 A A A 404,200 768,800 117,000 Total Property, plant & equipment $ 1,054,300 1,290,000 $ $ Total Assets $ 1,852,200 1,404,600 Liabilities Current Liabilities Accounts payable Notes payable - current portion Taxes payable A A A $ $ $ 131,200 59,300 27,600 A A A $ 124,500 90,000 18,000 $218,100 Total Current Liabilities $232,500 Von-Current Liabilities Mortgage $ 360,000 $ 378,300 $578,100 $610,800 Total Liabilities Equity Preferred Shares Common Shares Retained Earnings $ $ $ 112,000 487,500 674,600 60,500 386,800 346,500 Total Equity $1,274,100 $793,800 Total Liabilities & Equity $1,852,200 $1,404,600 ACME Wulter's Market Income Statement Income Statement October 31, 2020 October 31, 2020 Net credit sales Cost of goods sold $ 3,032,900 $ 1,766,700 $ $ 2,510,900 1,279,300 Gross Profit $1,266,200 $1,231,600 Operating expenses Advertising Salaries Insurance Office supplies Depreciation Property taxes $ 169,700 $ 324,000 $ 130,000 $ 31,700 $ 105,400 $ 15,000 a ) 145,200 339,500 70,400 38,400 115,000 27,100 $ $ Total operating expenses $775,800 $735,600 Operating Profit $490,400 $496,000 Less interest $ 44,000 $ 57,500 Net income before taxes $446,400 $438,500 Income taxes $ 42,200 $ 35,400 Net Income $404,200 $403,100 Preferred Dividends Common Dividends $ $ 16,200 92,000 $ $ 23,300 84,800 16,200 46,800 Common Shares Outstanding Selected ratios of interest: AR Turnover Days Sales in Inventory Earnings per (Common) Share Times Interest Earned Return On Equity (Common) Current Ratin Required: Analyze the list of ratios above for both ACME and Wulter's Market. Provide your opinion if Teddy Bearheart should invest in ACME. (13 marks) For purposes of calculations, assume that Accounts Receivable, Inventory, Total Assets, Total Payables, etc. are "average". Teddy Bearheart who invested in another company, Wulter's Market, is thinking of investing in ACME Incorporated. You are hired to perform a financial analysis of the company's statements at their October 31, 2020 year-end and compare it to Wulter's Market ACME Wulter's Market Balance Sheet Balance Sheet October 31, 2020 October 31, 2020 Current Assets Cash $ 433,600 -$ 232,300 Accounts receivable $ 198,800 $ 207,300 Merchandise inventory $ 120,000 $ 121,200 Short term investments $ 45,500 69 18,400 Total Current Assets $ 797,900 $ 114,600 Store equipment Building Land $ 360,500 $ 618,800 $ 75,000 A A A 404,200 768,800 117,000 Total Property, plant & equipment $ 1,054,300 $ 1,290,000 Total Assets $ 1,852,200 $ 1,404,600 Liabilities Current Liabilities Accounts payable $ 131,200 Notes payable - current portion $ 59,300 Taxes payable $ 27,600 $ $ $ 124,500 90,000 18,000 Total Current Liabilities $218,100 $232,500 Non-Current Liabilities Mortgage $360,000 $ 378,300 Total Liabilities $578,100 $610,800 Equity Preferred Shares Common Shares Retained Earnings $ 112,000 $ 487,500 $ 674,600 $ $ $ 60,500 386,800 346,500 Total Equity $1,274,100 $793,800 Total Liabilities & Equity $1,852,200 $1,404,600 ACME Wulter's Market Income Statement Income Statement October 31, 2020 October 31, 2020 Net credit sales Cost of goods sold $ 3,032,900 $ 1,766,700 $ $ 2,510,900 1,279,300 Gross Profit $1,266,200 $1,231,600 Operating expenses Advertising Salaries Insurance Office supplies Depreciation Property taxes $ 169,700 $ 324,000 $ 130,000 $ 31,700 $ 105,400 $ 15,000 $ $ $ $ $ $ 145,200 339,500 70,400 38,400 115,000 27,100 Total operating expenses $775,800 $735,600 Operating Profit $490,400 $496,000 Less interest $ 44,000 57,500 Net income before taxes $446,400 $438,500 Income taxes $ 42,200 $ 35,400 Net Income $404,200 $403,100 $ Preferred Dividends Common Dividends A A 16,200 92,000 AA $ $ 23,300 84,800 16,200 46,800 Common Shares Outstanding Selected ratios of interest: AR Turnover Days Sales in Inventory Earnings per (Common) Share Times Interest Earned Return On Equity (Common) Current Ratio Required: Analyze the list of ratios above for both ACME and Wulter's Market. Provide your opinion if Teddy Bearheart should invest in ACME (13 marks) For purposes of calculations, assume that Accounts Receivable, Inventory, Total Assets, Total Payables, etc. are average