The comparative balance sheets of Waterways Corporation's Irrigation Installation Division for the years 2019 and 2020 and the income statements for the year 2019 and 2020 are presented below.

The comparative balance sheets of Waterways Corporation's Irrigation Installation Division for the years 2019 and 2020 and the income statements for the year 2019 and 2020 are presented below. Additional information: 85% of the sales for Waterways were credit sales. There are 5,000 shares outstanding for both years. This is a private corporation whose shares are not available to the public. WATERWAYS CORPORATION-INSTALLATION DIVISION Balance Sheets December 31 Assets 2020 2019 Current assets Cash $833,100 $740,400 Accounts receivable 676,400 541,900 Work in process 705,600 Inventory 16,700 7,500 Prepaid expenses 77,300 42,900 Total current assets 2,309,100 1,332,700 Property, plant, and equipment Land 301,000 301,000 Buildings 446,000 446,000 Equipment 922,200 794,700 Furnishings 40,000 40,000 Accumulated depreciation (483,600) (483,300) Total property, plant, and equipment 1,225,600 1,098,400 Total assets $3,534,700 $2,431,100 $ 127,800 80,100 1,900 $156,100 101,000 4,500 1,200 14,500 14,900 292,200 - Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Wages payable Interest payable Other current liabilities Revolving bank loan payable Total current liabilities Long-term liabilities Note payable Total liabilities Stockholders' equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 15,400 225,200 140,000 432,200 225,200 1,250,000 1,852,500 3,102,500 $3,534,700 1,250,000 955,900 2,205,900 $2,431,100 WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statements For the Year Ending December 31 2020 2019 Sales $5,540,557 $5,005,800 Less: Cost of goods sold 3,134,200 2,810,000 Gross profit 2,406,357 2,195,800 Operating expenses Advertising 49,800 47,800 Insurance 399,800 399,800 Salaries and wages 586,000 556,000 Depreciation 74,800 65,800 Other operating expenses 21,300 18,359 Total operating expenses 1,131,700 1,087,759 Income from operations 1,274,657 1,108,041 Other income Gain on sale of equipment 18,400 Other expenses Interest expense (12,200) Income before income tax 1,280,857 1,108,041 Income tax expense 384,257 332,412 Net income $896,600 $775,629 | (a) Prepare a horizontal analysis of the income statement using 2019 as the base year. (Do not leave any answer field blank. O for amounts. Round percentage values to 1 decimal place, e.g. 52.7%. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statement 2020 2019 Change Percent Sales $5,540,557 $5,005,800 % Less: Cost of goods sold 3,134,200 2,810,000 % 2,406,357 2,195,800 % Gross profit Operating expenses Advertising 49,800 47,800 % Insurance 399,800 399,800 % Salaries and wages 586,000 556,000 % Depreciation 74,800 65,800 % Other operating expenses 21,300 18,359 % Total operating expenses 1,131,700 1,087,759 % Income from operations 1,274,657 1,108,041 % Other Income WO income from operations 1,274,057 1,108,041 Other income % Gain on sale of equipment 18,400 Other expenses (12,200) % Interest expense % Income before income tax 1,280,857 1,108,041 384,257 Income tax expense 332,412 % $896,600 Net Income $775,629 % (b) Prepare a vertical analysis of the income statement for 2020. (Round percentage values to 1 decimal place, e.g. 52.7%. Enter negative amounts using either a negative sign preceding the number e.g. -45% or parentheses e.g. (45)%) WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statement Amount Percent Sales $5,540,557 % Less: Cost of goods sold 3,134,200 % Gross profit 2,406,357 % Operating expenses Advertising 49,800 % 3,134,200 % Less: Cost of goods sold Gross profit 2,406,357 % Operating expenses Advertising 49,800 % Insurance 399,800 % Salaries and wages 586,000 % Depreciation 74,800 % Other operating expenses 21,300 % Total operating expenses 1,131,700 % Income from operations 1,274,657 % Other income Gain on sale of equipment 18,400 % Other expenses Interest expense (12,200) % Income before income tax 1,280,857 % Income tax expense 384,257 % Net income $896,600 % (c) Calculate the following ratios for 2020 and indicate whether the ratio is a liquidity, solvency, or profitability ratio. (Round Asset turnover ratio, Accounts receivable turnover ratio, Current ratio and Earnings per share to 2 decimal places, e.g. 15.25. Round Average collection period, Debt to assets ratio, Profit margin, Return on assets ratio, Return on common stockholders' equity ratio and Times Interest earned ratio to 1 decimal place, e.g. 15.2 or 15.2%. Use 365 days for calculation.) Type (1) Asset turnover ratio times (2) Accounts receivable turnover ratio times (3) Average collection period days (4) Current ratio : 1 (d) Comment on your findings. Liquidity : The company's liquidity is Solvency : The company's solvency is very Profitability The company's profitability is Overall By all measures the company appears to be both financially