Question
The 2023 financial statements of Outdoor Waterworks Inc. follow: Outdoor Waterworks Inc. Income Statement For Year Ended December 31, 2023 Net sales $ 1,046,000 Cost
The 2023 financial statements of Outdoor Waterworks Inc. follow:
Outdoor Waterworks Inc. | |||
Income Statement | |||
For Year Ended December 31, 2023 | |||
Net sales | $ | 1,046,000 | |
Cost of goods sold: | |||
Inventory, Dec. 31, 2022 | $ | 79,360 | |
Purchases | 608,840 | ||
Goods available for sale | $ | 688,200 | |
Inventory, Dec. 31, 2023 | 60,240 | ||
Cost of goods sold | 627,960 | ||
Gross profit from sales | $ | 418,040 | |
Operating expenses | 281,360 | ||
Operating profit | $ | 136,680 | |
Interest expense | 12,200 | ||
Profit before taxes | $ | 124,480 | |
Income taxes | 19,264 | ||
Profit | $ | 105,216 | |
Outdoor Waterworks Inc. | |||
Balance Sheet | |||
December 31, 2023 | |||
Assets | |||
Cash | $ | 23,000 | |
Current non-strategic investments | 25,440 | ||
Accounts receivable, net | 52,880 | ||
Notes receivable | 11,360 | ||
Inventory | 60,240 | ||
Prepaid expenses | 5,920 | ||
Plant and equipment, net | 330,520 | ||
Total assets | $ | 509,360 | |
Liabilities and Equity | |||
Accounts payable | $ | 49,160 | |
Accrued wages payable | 6,400 | ||
Income taxes payable | 7,200 | ||
Long-term note payable, secured by mortgage on plant | 116,400 | ||
Common shares, 160,000 shares | 196,000 | ||
Retained earnings | 134,200 | ||
Total liabilities and equity | $ | 509,360 | |
Assume all sales were on credit. Also assume the long-term note payable is due in 2026, with no current portion. On the December 31, 2022, balance sheet, the assets totalled $436,720, common shares were $196,000, and retained earnings were $110,040. 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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