The 2017 financial statements of Outdoor Waterworks Inc. follow: Outdoor Waterworks Inc. Income Statement For Year Ended December 31, 2017 Net sales $1,166,000 Cost of goods sold: Inventory, Dec. 31, 2016 85,360 620,840 Purchases Goods available for sale Inventory, Dec. 31, 2017 $706,200 62,040 Cost of goods sold 644,160 Gross profit from sales Operating expenses $521,840 293,360 $228,480 13,400 Operating profit Interest expense $215,080 19,864 Profit before taxes Income taxes $195,216 Profit Outdoor Waterworks Inc. Balance Sheet December 31, 2017 Assets Cash Current non-strategic investments Accounts receivable, net Notes receivable $24,200 26,880 54,080 12,560 62,040 6,160 336,520 Inventory Prepaid expenses Plant and equipment, net Total assets $522,440 Liabilities and Equity Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant Common shares, 160,000 shares Retained eamings $ 49,640 6,640 7,560 120,000 202,000 136,600 Total liabilities and equity $522,440 Assume all sales were on credit. Also assume the long-term note payable is due in 2020, with no current portion. On the December 31,2016, balance sheet, the assets totalled $442,720, common shares were $202,000, and retained earnings were $113,640 Required: Calculate the following: (Use 365 days in a year. Round your answers to 2 decimal places.) a. Current ratio to 1 b. Quick ratio to 1 c. Days' sales uncollected d. Inventory turnover days times e.Days' sales in inventory days f. Ratio of pledged plant assets to secured liabilities g.Times interest earned to 1 times h. Profit margin i.Total asset turnover times j.Retun on total assets % k. Return on common shareholders' equity % Analysis Component: Identify whether the ratios calculated above are favourable or unfavourable to the industry averages. Industry Average a. Current ratio 1.6:1 b. Quick ratio 1.1:1 c. Days' sales uncollected d. Inventory turnover e. Days' sales in inventory f.Ratio of pledged plant assets to secured liabilities 21 days 5 times 70 days 1.4:1 g. Times interest earned 50 times h. Profit margin 14 % .Total asset turnover 2.3 times i. Return on total assets 20 % k. Return on common shareholders' equity 32.7% The 2017 financial statements of Outdoor Waterworks Inc. follow: Outdoor Waterworks Inc. Income Statement For Year Ended December 31, 2017 Net sales $1,166,000 Cost of goods sold: Inventory, Dec. 31, 2016 85,360 620,840 Purchases Goods available for sale Inventory, Dec. 31, 2017 $706,200 62,040 Cost of goods sold 644,160 Gross profit from sales Operating expenses $521,840 293,360 $228,480 13,400 Operating profit Interest expense $215,080 19,864 Profit before taxes Income taxes $195,216 Profit Outdoor Waterworks Inc. Balance Sheet December 31, 2017 Assets Cash Current non-strategic investments Accounts receivable, net Notes receivable $24,200 26,880 54,080 12,560 62,040 6,160 336,520 Inventory Prepaid expenses Plant and equipment, net Total assets $522,440 Liabilities and Equity Accounts payable Accrued wages payable Income taxes payable Long-term note payable, secured by mortgage on plant Common shares, 160,000 shares Retained eamings $ 49,640 6,640 7,560 120,000 202,000 136,600 Total liabilities and equity $522,440 Assume all sales were on credit. Also assume the long-term note payable is due in 2020, with no current portion. On the December 31,2016, balance sheet, the assets totalled $442,720, common shares were $202,000, and retained earnings were $113,640 Required: Calculate the following: (Use 365 days in a year. Round your answers to 2 decimal places.) a. Current ratio to 1 b. Quick ratio to 1 c. Days' sales uncollected d. Inventory turnover days times e.Days' sales in inventory days f. Ratio of pledged plant assets to secured liabilities g.Times interest earned to 1 times h. Profit margin i.Total asset turnover times j.Retun on total assets % k. Return on common shareholders' equity % Analysis Component: Identify whether the ratios calculated above are favourable or unfavourable to the industry averages. Industry Average a. Current ratio 1.6:1 b. Quick ratio 1.1:1 c. Days' sales uncollected d. Inventory turnover e. Days' sales in inventory f.Ratio of pledged plant assets to secured liabilities 21 days 5 times 70 days 1.4:1 g. Times interest earned 50 times h. Profit margin 14 % .Total asset turnover 2.3 times i. Return on total assets 20 % k. Return on common shareholders' equity 32.7%