The following are condensed financial statements of The Windy West Company for the three years ended December 31, 2020, 2021, 2022. The Windy West Company expanded their business in 2021-2022. The Windy West Company Comparative Balance Sheets December 31 (thousands of $) 2022 Current Assets Cash 2021 2020 $ 450 $ 50 $ 200 Accounts Receivable $ 590 $ 480 $ 240 Less: Allowance for Doubtful Accounts 50 540 20 460 240 Inventory Prepaid Expenses 750 130 Total Current Assets Capital Assets Less: Accumulated Depreciation 500 100 $ 1,870 $ 1,060 $ 1,040 4,050 2,340 1,380 930 3,120 540 1,800 270 1,110 $ 4,990 $ 2,860 $ 2,150 520 30 Total Assets Current Liabilities Accounts Payable Accrued Liabilities Total Current Liabilities Bonds Payable Total Liabilities Shareholders' Equity 1,300 760 510 110 50 $ 1,300 $ 870 $ 560 600 600 260 $ 1,900 $ 1,470 $ 820 Common Shares Retained Earnings 2,300 790 960 960 430 370 Total Shareholders' Equity $ 3,090 $ 1,390 $ 1,330 Total Liabilities and Shareholders' Equity $ 4,990 $ 2,860 2,150 On January 1, 2022, 300 additional shares of common stock were sold (share numbers in thousands). The Windy West Company Comparative Income Statements For the Year Ended December 31 (thousands of $) The Windy West Company Comparative Statements of Retained Earnings For the Year Ended December 31 (thousands of $) Sales 2022 2021 2020 $ 3,480 $ 2,000 $ 1,500 Balance, January 1 Add: Net Income for the Year Cost of Goods Sold Beginning Inventory $ 520 $ 500 $ 400 Less: Dividend Add: Purchases 2,090 1,270 880 Balance, December 31 2022 2021 2020 $ 430 $ 370 $ 120 760 160 330 $ 1,190 $ 530 $ 450 400 100 80 $ 790 $ 430 $ 370 $ 2,610 $ 1,770 $ 1,280 Less: Ending Inventory 750 520 500 The following additional information is available: (all numbers in thousands) Cost of Goods Sold 1,860 1,250 780 a. All sales are on credit; credit terms are net 60 days after invoice date. Gross Profit $ 1,620 $ 750 $ 720 Less: Selling and Administrative Expenses b. Number of shares of common stock were outstanding in 2020 (in thousands) 200 I Net Income from Operations $ Interest Expense 720 500 300 900 $ 250 $ 420 60 60 Number of shares of common stock were outstanding in 2021 (in thousands) 200 On January 2, 2022, 300 additional shares of common stock were sold (share numbers in thousands). 500 c. Opening balance of accounts receivable on January 1, 2020 was $ 190.00 Income Before Income Tax $ 840 $ 190 $ 420 Income Tax 80 30 90 d. Net capital assets for January 1, 2020, was $ 910.00 Net income $ 760 $ 160 $ 330 e. Total assets on January 1, 2020, was $ 1,650.00 f. Total shareholders' equity on January 1, 2020, was $ 1,010.00 g. In 2020, market price per share was $ 4.80 h. In 2021, market price per share was $ 4.00 i. In 2022, market price per share was $ 3.00 Required: ACC 1175-Case Study INDUSTRY AVERAGE Formula 2022 2021 2020 1. Complete the required calculations. Round all answers two decimal places. (51 Marks) 2. What conclusion can be drawn from each of the financial ratio areas you calculated above? Compare 2022 to 2021 and 2020 to identify trends. Also compare to the industry averages found attached to this problem. (20 Marks) 3. Was The Windy West Company wise to expand operations? Yes or no and a brief explanation. (9 Marks) 4. Submit this sheet with your calculations AND THE SUMMARY sheet, along with your written answers to Questions #2 and # 3 to your instructor Days' sales in inventory 60 days 7 Total asset turnover 2.3 times INDUSTRY AVERAGE Formula 1 Current ratio 1.6:1 2 Acid-test ratio Accounts receivable 3 turnover 16 times Days' sales 4 21 days uncollected Merchandise 5 turnover 5 times 2022 2021 2020 8 Debt ratio 35% 9 Equity ratio 65% 10 Times interest earned 50 times 11 Profit margin 20% 12 Gross profit ratio 18% Return on total assets 20% INDUSTRY Formula 2022 2021 2020 AVERAGE Return on common 14 32.70% S/E equity 15 Basic earnings per share $1.79 16 Price-earnings ratio 18.2 17 Dividend yield 13.50% Windy_West_Co_Summary_Sheet_23FL.xlsx ACC 1175 Case Study Ratio Summary Sheet Enter your final answers for each ratio (NOT calculations) in the appropriate boxes below for each ratio. Use TWO decimal places. Make sure you get your answers into the correct year. Submit this sheet plus your calculations sheet. Answers on this sheet must match the answers on the calculation sheet. Answers that do not match will receive a zero grade. 1 Current ratio 2 3 Acid-test ratio Accounts receivable turnover 4 Days' sales uncollected 5 Merchandise turnover 6 Days' sales in inventory 7 8 9 10 Total asset turnover Debt ratio Equity ratio Times interest earned 11 Profit margin 12 Gross profit ratio 13 Return on total assets 14 Return on common S/E equity 15 16 Basic earnings per share Price-earnings ratio 17 Dividend yield 2022 2021 2020