Question
The 2020 financial statements of Outdoor Waterworks Inc. follow: Outdoor Waterworks Inc. Income Statement For Year Ended December 31, 2020 Net sales $ 986,000 Cost
The 2020 financial statements of Outdoor Waterworks Inc. follow:
Outdoor Waterworks Inc. | |||
Income Statement | |||
For Year Ended December 31, 2020 | |||
Net sales | $ | 986,000 | |
Cost of goods sold: | |||
Inventory, Dec. 31, 2019 | $ | 76,360 | |
Purchases | 602,840 | ||
Goods available for sale | $ | 679,200 | |
Inventory, Dec. 31, 2020 | 59,340 | ||
Cost of goods sold | 619,860 | ||
Gross profit from sales | $ | 366,140 | |
Operating expenses | 275,360 | ||
Operating profit | $ | 90,780 | |
Interest expense | 11,600 | ||
Profit before taxes | $ | 79,180 | |
Income taxes | 18,964 | ||
Profit | $ | 60,216 | |
Outdoor Waterworks Inc. | |||
Balance Sheet | |||
December 31, 2020 | |||
Assets | |||
Cash | $ | 22,400 | |
Current non-strategic investments | 24,720 | ||
Accounts receivable, net | 52,280 | ||
Notes receivable | 10,760 | ||
Inventory | 59,340 | ||
Prepaid expenses | 5,800 | ||
Plant and equipment, net | 327,520 | ||
Total assets | $ | 502,820 | |
Liabilities and Equity | |||
Accounts payable | $ | 48,920 | |
Accrued wages payable | 6,280 | ||
Income taxes payable | 7,020 | ||
Long-term note payable, secured by mortgage on plant | 114,600 | ||
Common shares, 160,000 shares | 193,000 | ||
Retained earnings | 133,000 | ||
Total liabilities and equity | $ | 502,820 | |
Assume all sales were on credit. Also assume the long-term note payable is due in 2023, with no current portion. On the December 31, 2019, balance sheet, the assets totalled $433,720, common shares were $193,000, and retained earnings were $108,240. Required: Calculate the following: (Use 365 days in a year. Do not round your intermediate calculations. Round the answers to 2 decimal places.)
Analysis Component: Identify whether the ratios calculated above are favourable or unfavourable to the industry averages.
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