Waterloo Brewing Ltd. is a Kitchener, Ontario– based public company. The company is a producer and distributor of beer, cider, and other alcohol-based products. The company primarily serves the Ontario market. The 2021 statements of comprehensive
income, financial position, and cash flows are shown in Exhibits 12.12A.

Required
a. Calculate the following ratios for both 2021 and 2020:

i. Current ratio 

ii. Quick ratio 

iii. Operating cash flow ratio 

iv. Inventory turnover 

v. Days to sell inventory 

b. Comment on Waterloo Brewing’s liquidity. 

c. Calculate the following ratios for both 2021 and 2020, and comment on the changes: 

i. Return on assets 

ii. Return on equity 

d. Comment on the use of leverage by Waterloo Brewing, using appropriate ratios to support your analysis. 

e. Calculate Waterloo Brewing’s net free cash flow for 2021 and 2020. What does this tell us about the company’s financial flexibility? 

f. What do you know about Waterloo Brewing given that its basic and diluted earnings per share amounts are virtually the same?

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WATERLOO BREWING LTD. Statements of Comprehensive Income Years ended January 31, 2021 and 2020 Revenue Cost of sales Gross profit Selling, marketing and administrative expenses Other expenses Finance costs Loss on misappropriated funds, net Loss (gain) on disposal pf property, plant and equipment and right-of-use assets Income before tax Income tax expense Net income and comprehensive income for the year Basic earnings per share Diluted earnings per share Notes 20 13,21 13,21 13, 21, 22 13, 23 12 17 24 24 January 31, 2021 $86,699,345 66,000,997 20,698,348 11,853,169 2,268,499 2,107,363 215,756 4,253,561 1,253,548 $3,000,013 $0.09 $0.08 January 31, 2020 $60,333,417 42,483,862 17,849,555 11,842,088 1,616,977 1,500,682 1,869,595 (15,168) 1,035,381 537,779 $ 497,602 $ $ 0.01 0.01