Water World Ltd. operates a waterslide park outside of a major Canadian city. The owner, your uncle, is in a bind since his brother, who usually prepares the operating and cash budgets, has unexpectedly left the company. Your mother, has recommended you to help since you are taking an accounting course and will have valuable skills that can help the family out. Your uncle has provided the following information: The water park is open from May through September and 60% of its sales are paid in cash, 30% are paid by credit card and 10% are school groups that are billed to the school divisions. Credit card companies deposit payment to Water World's corporate bank account the same day less a 1% processing fee. Admission fees billed to school groups are paid the following month. All expenses are paid the month they are incurred. The following projections have been completed to date (this table is also available in Excel Appendix A): Sales Staff costs Operating Expenses Depreciation expense Pool supplies expense Expected attendance S S S $ 2021 Operating Year Projections May June July August September 160,000 $ 210,000 $ 300,000 $ 300,000 $ 250,000 (43,200) $ (56,700) $ (81,000) $ (81,000) $ (67,500) (54,400) $ (71,400) $ (102,000) $ (102,000) $ (85,000) (13,000) $ (13,000) $ (13,000) $ (13,000) $ (13,000) 6,880 9,030 12,900 12,900 10.750 The pool supply expense line is incomplete. Your uncle tells you that the park uses balanced chlorine kits to maintain the pools and slides at a cost of $250 per kit and the number needed is based on anticipated usage. He expects to use 10 in May, 20 in June, 40 in July, 40 in August and 20 in September but always wants to have 10% of next month's requirements on hand "just in case". There are 10 kits currently in inventory and he would like to have at least 5 kits at the end of the year. In addition, repairs are required to the slides in May at an estimated total cost of $125,000 (assume that this is classified as an expense). He also needs to pay $50,000 per operating month on the long-term, non- interest bearing loan (held by the previous owners - his parents who sold the business to him when they retired) and wants to pay a dividend in the amount of $25,000 each operating month, which he receives in licu of a salary Water World Ltd. has a $500,000 line of credit that can be drawn on for short-term financing. The line of credit balance is currently at zero and 5% annual interest is paid the following month on the outstanding balance at the end of the month any excess cash is immediately used to pay down the line of credit. The cash balance is currently $40,000. Your uncle is also curious about horizontal analysis, vertical analysis and financial ratios and has provided a set of comparative financial statements and industry comparison numbers (Excel Appendix B). He would like you to analyze and explain the concepts of liquidity, solvency and profitability in a short report that includes your conclusions and any recommendations for improvement, please also include the current-year projections in the profitability ratio calculations. He is particularly interested if there is a way to generate more cash from the business, Your uncle understands that completing the operating budget, the cash budget and the financial statement analysis is a large undertaking and suggests that you get a few of your friends from school to help you and to ignore income taxes for now. In appreciation, you and your friends will receive complimentary admission to the waterpark and concessions vouchers for the full summer. It does look to be a hot summer and hanging out in a waterpark with your friends, once the work is done, sounds awesome. Time to call them up, convince them to help and get to work. D H Operating Budget May 160,000 $ July S June 210,000 $ August September 300,000 $ 250,000 300,000 $ Sales Credit Card Charses Staff costs Operating expenses Depreciation expense Pool supplies expense Operating Profit (43,200) (54.400) (13.000) (52,500) (71.400) (13,000) (75,000) (102,000) (13,000) (75,000) (102,000) (13,000) (62,500) (85.000) (13,000) A B H Schedule of expected collections from Customers May June July August September October Aopendices information Operating Bodont Chlorine Kuts Patched Cash Collections Cash Budget Ratio Analysis Financial Analysis Report D G H Cash Budget May June July August September October Appendices Information Operating Budget Chlorine Kits Purchased Cash Collections Cash Budget Ratio Analysis Financial Analysis Report F Water Word lid Financial Ratio 2018 2019 2020 2017 2021 projected Trend Industry Average Financial Metrics 2020 Carretrato Accounts receivable cover 10.1 Working capital 350,893 Debt to total 0.68 Debt to quity 0.45 Tiones Interested 25.2 Operating margin 46 Average revenu per gutt 5 3605 Average opening expert 5 Average stating cost per guest 3 493 1 7.50 0 Acconoces formation Counting todo Chiine Kes Puded Cat Collection Cash Budget Patio Analys Financial Analyse pod + D H M ***The Financial Analysis Report is to be completed as a Word document.*** Appendices Information Operating Budget Chlorine Kits Purchased Cash Collections Cash Budget Ratio Analysis Financial Analys Water World Ltd. operates a waterslide park outside of a major Canadian city. The owner, your uncle, is in a bind since his brother, who usually prepares the operating and cash budgets, has unexpectedly left the company. Your mother, has recommended you to help since you are taking an accounting course and will have valuable skills that can help the family out. Your uncle has provided the following information: The water park is open from May through September and 60% of its sales are paid in cash, 30% are paid by credit card and 10% are school groups that are billed to the school divisions. Credit card companies deposit payment to Water World's corporate bank account the same day less a 1% processing fee. Admission fees billed to school groups are paid the following month. All expenses are paid the month they are incurred. The following projections have been completed to date (this table is also available in Excel Appendix A): Sales Staff costs Operating Expenses Depreciation expense Pool supplies expense Expected attendance S S S $ 2021 Operating Year Projections May June July August September 160,000 $ 210,000 $ 300,000 $ 300,000 $ 250,000 (43,200) $ (56,700) $ (81,000) $ (81,000) $ (67,500) (54,400) $ (71,400) $ (102,000) $ (102,000) $ (85,000) (13,000) $ (13,000) $ (13,000) $ (13,000) $ (13,000) 6,880 9,030 12,900 12,900 10.750 The pool supply expense line is incomplete. Your uncle tells you that the park uses balanced chlorine kits to maintain the pools and slides at a cost of $250 per kit and the number needed is based on anticipated usage. He expects to use 10 in May, 20 in June, 40 in July, 40 in August and 20 in September but always wants to have 10% of next month's requirements on hand "just in case". There are 10 kits currently in inventory and he would like to have at least 5 kits at the end of the year. In addition, repairs are required to the slides in May at an estimated total cost of $125,000 (assume that this is classified as an expense). He also needs to pay $50,000 per operating month on the long-term, non- interest bearing loan (held by the previous owners - his parents who sold the business to him when they retired) and wants to pay a dividend in the amount of $25,000 each operating month, which he receives in licu of a salary Water World Ltd. has a $500,000 line of credit that can be drawn on for short-term financing. The line of credit balance is currently at zero and 5% annual interest is paid the following month on the outstanding balance at the end of the month any excess cash is immediately used to pay down the line of credit. The cash balance is currently $40,000. Your uncle is also curious about horizontal analysis, vertical analysis and financial ratios and has provided a set of comparative financial statements and industry comparison numbers (Excel Appendix B). He would like you to analyze and explain the concepts of liquidity, solvency and profitability in a short report that includes your conclusions and any recommendations for improvement, please also include the current-year projections in the profitability ratio calculations. He is particularly interested if there is a way to generate more cash from the business, Your uncle understands that completing the operating budget, the cash budget and the financial statement analysis is a large undertaking and suggests that you get a few of your friends from school to help you and to ignore income taxes for now. In appreciation, you and your friends will receive complimentary admission to the waterpark and concessions vouchers for the full summer. It does look to be a hot summer and hanging out in a waterpark with your friends, once the work is done, sounds awesome. Time to call them up, convince them to help and get to work. D H Operating Budget May 160,000 $ July S June 210,000 $ August September 300,000 $ 250,000 300,000 $ Sales Credit Card Charses Staff costs Operating expenses Depreciation expense Pool supplies expense Operating Profit (43,200) (54.400) (13.000) (52,500) (71.400) (13,000) (75,000) (102,000) (13,000) (75,000) (102,000) (13,000) (62,500) (85.000) (13,000) A B H Schedule of expected collections from Customers May June July August September October Aopendices information Operating Bodont Chlorine Kuts Patched Cash Collections Cash Budget Ratio Analysis Financial Analysis Report D G H Cash Budget May June July August September October Appendices Information Operating Budget Chlorine Kits Purchased Cash Collections Cash Budget Ratio Analysis Financial Analysis Report F Water Word lid Financial Ratio 2018 2019 2020 2017 2021 projected Trend Industry Average Financial Metrics 2020 Carretrato Accounts receivable cover 10.1 Working capital 350,893 Debt to total 0.68 Debt to quity 0.45 Tiones Interested 25.2 Operating margin 46 Average revenu per gutt 5 3605 Average opening expert 5 Average stating cost per guest 3 493 1 7.50 0 Acconoces formation Counting todo Chiine Kes Puded Cat Collection Cash Budget Patio Analys Financial Analyse pod + D H M ***The Financial Analysis Report is to be completed as a Word document.*** Appendices Information Operating Budget Chlorine Kits Purchased Cash Collections Cash Budget Ratio Analysis Financial Analys