Waterways Continuing Problem 18 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 $744,200 545,800 Cash Accounts receivable Work in process Inventory Prepaid expenses $829,900 676,300 701,400 16,700 75,800 7,600 42,200 2,300,100 1,339,800 Total current assets Property, plant, and equipment Land Buildings Equipment Furnishings Accumulated depreciation 298,000 450,000 927,200 40,700 (481,500) 1,234,400 298,000 450,000 797,100 40,700 (481,100) Total property, plant, and equipment 1,104,700 $3,534,500 $2,444,500 Total assets Liabilities and Stockholders Equity Current liabilities $128,500 79,600 2,000 Accounts payable Income taxes payable Wages payable Interest payable Other current liabilities Revolving bank loan payable $156,400 101,500 4,400 1,200 14,500 14,800 292,800 15,400 Total current liabilities 225,500 Long-term liabilities Note payable 142,000 434,800 Total liabilities 225,500 Stockholders' equity Common stock Retained earnings 1,250,000 1,250,000 969,000 3,099,700 2,219,000 $3,534,500 $2,444,500 1,849,700 Total stockholders' equity Total liabilities and stockholders' equity WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statements Sales Less: Cost of goods sold Gross profit Operating expenses For the Year Ending December 31 2020 $5,517,843 3,139,000 2,378,843 2019 $4,969,800 2,801,500 2,168,300 Advertising Insurance Salaries and wages Depreciation Other operating expenses 49,600 400,100 581,200 74,700 21,300 1,126,900 1,251,943 47,600 400,100 551,200 65,700 18,478 1,083,078 1,085,222 Total operating expenses Income from operations Other income Gain on sale of equipment Other expenses 18,200 Interest expense Income before income tax Income tax expense Net income (12,000) 1,258,143 377,443 $880,700 1,085,222 325,567 $759,655 Prepare a horizontal analysis of the income statement using 2019 as the base year. (Do not leave any answer field blank. Enter 0 for amounts. Round percentage values to 1 decimal place, eg. 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 Change 2019 $5,517,843 $4,969,800 2,801,500 2,168,300 2020 Percent Sales Less: Cost of goods sold Gross profit Operating expenses 3,139,000 2,378,843 Advertising 49,600 400,100 581,200 74,700 21,300 1,126,900 1,251,943 47,600 400,100 551,200 65,700 18,478 1,083,078 1,085,222 Insurance Salies and wages Depreciation Other operating expenses Total operating expenses Income from operations Other income Gain on sale of equipment 18,200 Other expenses Interest expense Income before income tax Income tax expense (12,000) 1,258,143 377,443 $880,700 1,085,222 325,567 $759,655 Net income 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.-4596 or parentheses e.g. (45)96) WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statement Amount $5,517,843 3,139,000 2,378,843 Percent Sales Less: Cost of goods sold Gross profit Operating expenses Advertising Insurance Salaries and wages Depreciation Other operating expenses 49,600 400,100 581,200 74,700 21,300 1,126,900 1,251,943 Total operating expenses Income from operations Other income Gain on sale of equipment 18,200 Other expenses Interest expense Income before income tax Income tax expense Net income (12,000) 1,258,143 377,443 $880,700 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 (2) Accounts receivable turnover ratio (3) Average collection period (4) Current ratio (5) Debt to assets ratio (6) Earnings per share (7) Profit margin (8) Return on assets ratio (9) Return on common stockholders' equity ratic times times (10) Times interest earned ratio imes Comment on your findings Liquidity: The company's liquidity is Solvency: The company's solvency is very Profitability The company's profitability is Overall Click if you would like to Show Work for this question: Open Show Work :By all measures the company appears to be both financially Waterways Continuing Problem 18 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 $744,200 545,800 Cash Accounts receivable Work in process Inventory Prepaid expenses $829,900 676,300 701,400 16,700 75,800 7,600 42,200 2,300,100 1,339,800 Total current assets Property, plant, and equipment Land Buildings Equipment Furnishings Accumulated depreciation 298,000 450,000 927,200 40,700 (481,500) 1,234,400 298,000 450,000 797,100 40,700 (481,100) Total property, plant, and equipment 1,104,700 $3,534,500 $2,444,500 Total assets Liabilities and Stockholders Equity Current liabilities $128,500 79,600 2,000 Accounts payable Income taxes payable Wages payable Interest payable Other current liabilities Revolving bank loan payable $156,400 101,500 4,400 1,200 14,500 14,800 292,800 15,400 Total current liabilities 225,500 Long-term liabilities Note payable 142,000 434,800 Total liabilities 225,500 Stockholders' equity Common stock Retained earnings 1,250,000 1,250,000 969,000 3,099,700 2,219,000 $3,534,500 $2,444,500 1,849,700 Total stockholders' equity Total liabilities and stockholders' equity WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statements Sales Less: Cost of goods sold Gross profit Operating expenses For the Year Ending December 31 2020 $5,517,843 3,139,000 2,378,843 2019 $4,969,800 2,801,500 2,168,300 Advertising Insurance Salaries and wages Depreciation Other operating expenses 49,600 400,100 581,200 74,700 21,300 1,126,900 1,251,943 47,600 400,100 551,200 65,700 18,478 1,083,078 1,085,222 Total operating expenses Income from operations Other income Gain on sale of equipment Other expenses 18,200 Interest expense Income before income tax Income tax expense Net income (12,000) 1,258,143 377,443 $880,700 1,085,222 325,567 $759,655 Prepare a horizontal analysis of the income statement using 2019 as the base year. (Do not leave any answer field blank. Enter 0 for amounts. Round percentage values to 1 decimal place, eg. 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 Change 2019 $5,517,843 $4,969,800 2,801,500 2,168,300 2020 Percent Sales Less: Cost of goods sold Gross profit Operating expenses 3,139,000 2,378,843 Advertising 49,600 400,100 581,200 74,700 21,300 1,126,900 1,251,943 47,600 400,100 551,200 65,700 18,478 1,083,078 1,085,222 Insurance Salies and wages Depreciation Other operating expenses Total operating expenses Income from operations Other income Gain on sale of equipment 18,200 Other expenses Interest expense Income before income tax Income tax expense (12,000) 1,258,143 377,443 $880,700 1,085,222 325,567 $759,655 Net income 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.-4596 or parentheses e.g. (45)96) WATERWAYS CORPORATION-INSTALLATION DIVISION Income Statement Amount $5,517,843 3,139,000 2,378,843 Percent Sales Less: Cost of goods sold Gross profit Operating expenses Advertising Insurance Salaries and wages Depreciation Other operating expenses 49,600 400,100 581,200 74,700 21,300 1,126,900 1,251,943 Total operating expenses Income from operations Other income Gain on sale of equipment 18,200 Other expenses Interest expense Income before income tax Income tax expense Net income (12,000) 1,258,143 377,443 $880,700 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 (2) Accounts receivable turnover ratio (3) Average collection period (4) Current ratio (5) Debt to assets ratio (6) Earnings per share (7) Profit margin (8) Return on assets ratio (9) Return on common stockholders' equity ratic times times (10) Times interest earned ratio imes Comment on your findings Liquidity: The company's liquidity is Solvency: The company's solvency is very Profitability The company's profitability is Overall Click if you would like to Show Work for this question: Open Show Work :By all measures the company appears to be both financially