Comparative financial statement data for Cool Brewery Ltd. and Northern Beer Ltd., two competitors, follow (amounts in thousands):

Required

a. Prepare a common-size analysis for 2020 for Cool Brewery Ltd. and Northern Beer Ltd.

b. Calculate the return on assets and the return on shareholders’ equity for both companies.

c. Comment on the relative profitability of these companies.

d. Based on your calculations above, identify two main reasons for the difference in their profitability.

e. Calculate the debt to equity ratio for both companies at the end of 2020.

f. Calculate the net debt as a percentage of total capitalization for both companies.

g. Compare the use of leverage by these companies based on the ratios calculated in parts “e” and “f.”

Cool Brewery Ltd. Northern Beer Ltd. 2020 2019 2020 2019 Net sales $206,700 $40,500 Cost of goods sold 100,500 15,300 85,400 Operating expenses 17,190 7,800 Interest expense 370 Income tax expense 4,700 1,130 $ 10,000 $ 2,500 Cash 12,000 4,500 86,000 Other current assets 80,500 8,200 7,400 30,700 Long-term assets (net) 210,000 209,600 29,100 71,900 60,800 3,900 Current liabilities 4,000 Long-term liabilities 103,900 117,500 8,000 7,400 Share capital 51,200 48,500 17,800 16,700 Retained earnings 81,000 73,300 12,100 12,500