Question
The 2023 financial statements of Outdoor Waterworks Inc. follow: Outdoor Waterworks Inc. Income Statement For Year Ended December 31, 2023 Net sales $ 1,116,000 Cost
The 2023 financial statements of Outdoor Waterworks Inc. follow:
Outdoor Waterworks Inc. | |||
Income Statement | |||
For Year Ended December 31, 2023 | |||
Net sales | $ | 1,116,000 | |
Cost of goods sold: | |||
Inventory, Dec. 31, 2022 | $ | 82,860 | |
Purchases | 615,840 | ||
Goods available for sale | $ | 698,700 | |
Inventory, Dec. 31, 2023 | 61,290 | ||
Cost of goods sold | 637,410 | ||
Gross profit from sales | $ | 478,590 | |
Operating expenses | 288,360 | ||
Operating profit | $ | 190,230 | |
Interest expense | 12,900 | ||
Profit before taxes | $ | 177,330 | |
Income taxes | 19,614 | ||
Profit | $ | 157,716 | |
Outdoor Waterworks Inc. | |||
Balance Sheet | |||
December 31, 2023 | |||
Assets | |||
Cash | $ | 23,700 | |
Current non-strategic investments | 26,280 | ||
Accounts receivable, net | 53,580 | ||
Notes receivable | 12,060 | ||
Inventory | 61,290 | ||
Prepaid expenses | 6,060 | ||
Plant and equipment, net | 334,020 | ||
Total assets | $ | 516,990 | |
Liabilities and Equity | |||
Accounts payable | $ | 49,440 | |
Accrued wages payable | 6,540 | ||
Income taxes payable | 7,410 | ||
Long-term note payable, secured by mortgage on plant | 118,500 | ||
Common shares, 160,000 shares | 199,500 | ||
Retained earnings | 135,600 | ||
Total liabilities and equity | $ | 516,990 | |
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 $440,220, common shares were $199,500, and retained earnings were $112,140. 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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