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.

a.) Prepare a horizontal analysis of the income statement using 2019 as the base year.

b.) Prepare a vertical analysis of the income statement for 2020.

c.) Calculate the following ratios for 2020 and indicate whether the ratio is a liquidity, solvency, or profitablility ratio.

d.) Comment your findings.

Question 2 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 $831,600 $750,700 Accounts receivable 684,300 542.100 Work in process 699,700 Inventory 17,000 7,400 Prepaid expenses 75,900 43.000 Total current assets 2,309,500 1,343,200 Property, plant, and equipment Land 300,000 300,000 Buildings 451,000 451,000 Equipment 928,600 800,000 Fumishings 40,600 40,600 Accumulated depreciation (479,500) (480,700) Total property, plant, and equipment 1.240,700 1,110,900 Total assets $3,549,200 $2,454,100 Liabilities and Stockholders' Equity Current liabilities Accounts payable $157,000 5127,600 WATERWAYS CORPORATION-INSTALLATION DIVISION Balance Sheets December 31 Assets 2020 2019 Current assets Cash $831,600 $750,700 Accounts receivable 684,300 542,100 Work in process 699,700 Inventory 17,000 7,400 Prepaid expenses 75,900 43,000 Total current assets 2,308,500 1,343,200 Property, plant, and equipment Land 300,000 300,000 Buildings 451,000 451,000 Equipment 928,600 800,000 Furnishings 40,600 40,600 Accumulated depreciation (479,500) (480,700) Total property, plant, and equipment 1,240,700 1,110,900 $3,549,200 $2,454,100 Liabilities and Stockholders' Equity Current liabilities Accounts payable $157,000 $127,600 Income taxes payable 100,900 79,700 Wages payable 4,600 2,000 Interest payable 1,200 Other current liabilities 14,700 15,300 Revolving bank loan payable 15,200 Total current liabilities 293,600 224,600 Total assets ECES 2,308,500 1,343,200 300,000 451,000 928,600 40,600 (479,500) 1,240,700 $3,549,200 300,000 451,000 800,000 40,600 (480,700) 1,110,900 $2,454,100 udy Total current assets Property, plant, and equipment Land Buildings Equipment Furnishings Accumulated depreciation Total property, plant, and equipment Total assets 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 $127,600 79,700 2,000 $157,000 100,900 4,600 1,200 14,700 15,200 293,600 15,300 224,600 138,000 431,600 224,600 1,250,000 1,867,600 3,117,600 $3,549,200 1,250,000 979,500 2,229,500 $2,454,100 WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statements TULOYOLULATUN acquiry Povo $3,549,200 ZT2200 $2,454,100 Total liabilities and stockholders' equity WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statements For the Year Ending December 31 2020 2019 Sales $5,500,914 $4,914,300 Less: Cost of goods sold 3,108,200 2,798,000 Gross profit 2,392,714 2,116,300 Operating expenses Advertising 49,500 47,500 Insurance 397,200 397,200 Salaries and wages 589,000 559,000 Depreciation 73,100 64,100 Other operating expenses 21,100 18,414 Total operating expenses 1,129,900 1,086,214 Income from operations 1,262,814 1,030,086 Other income & Gain on sale of equipment 18,100 Other expenses Interest expense (12,200) Income before income tax 1,268,714 1,030,086 Income tax expense 380,614 309,026 Net income $888,100 $721,060 (a) Prepare a horizontal analysis of the income statement using 2019 as the base year. (D place, e.g. 52.7%. Enter negative amounts using either a negative sign precea CRACK NEXT (a) Prepare a horirontal analysis of the income statement using 2019 as the base year. (Do not leave any answer field bank. Enter for amounts. Round percentage values to I decimat place, e.g. 52.7%. Enter negative amounts using other a negative sin preceding the number eg. 45 or parentheses 0.g. (45).) WATERWAYS CORPORATIONINSTALLATION DIVISION Income Statement 2020 2019 Change Percent Sales $5,500,914 $4,914,300 Less: Cost of goods sold 3,108,200 2,798,000 2,392,714 2,116,300 Gross profit Operating expenses Advertising 49,500 47,500 Insurance 397,200 397,200 Salaries and wages 589,000 559,000 Depreciation 73,100 64,100 Other operating expenses 21,100 18,414 Total operating expenses 1,129.900 1,086,214 1.262,814 1,030,086 Income from operations Other income Show All CALCULATOR PRINTER VERSION Other Income Gain on sale of equipment 18,100 Other expenses Interest expense (12,200) Income before income tax 1,268,714 1,030,086 Income tax expense 380,614 309,026 Net income $888,100 $721,060 (b) Prepare a vertical analysis of the income statement for 2020. (Round percentage values to I decimal place, .. 32.7%. Inter negative amounts using either negati preceding the number og. -5% or parentheses 0.9. (45)%) WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statement Amount Percent Sales 55,500,914 Less: Cost of goods sold 3,108,200 Gross profit 2,392,714 Operating expenses Advertising 49,500 WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statement Amount Percent Sales $5,500,914 Less: Cost of goods sold 3,108,200 2,392,714 Gross profit Operating expenses Advertising 49,500 % Insurance 397,200 Salaries and wages 589,000 Depreciation 73,100 * * * * Other operating expenses 21,100 Total operating expenses 1,129,900 1,262,814 96 Income from operations Other Income Gain on sale of equipment Other expenses 16,100 4 Interest expense (12.200) % RO 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 and Earnings per share to 2 decimal places, eg. 15.25. Round Average collection period Debt to assets ratio, Profit margin, Return on assets ratio, Return stockholders' equity rate and Times Interest earned ratio to 1 decimal place, ep. 15.2 or 15.2%. Use 365 days for calculation.) Type times times (1) Asset turnover ratio (2) Accounts receivable turnover ratio (3) Average collection period (4) Current ratio days :1 (5) Debt to assets ratio % (6) Earnings per share (7) Profit margin (8) Return on assets ratio % (9) Return on common stockholders' equity ratio % (10) Times interest earned ratio times (d) Comment on your findings. Liquidity The company's liquidity is (6) Earnings per share (7) Profit margin % (8) Return on assets ratio % (9) Return on common stockholders' equity ratio v (10) Times interest earned ratio times