Financial Statement Analysis Waterloo Chip Ltd Horizontal Analysisof Balance Sheets December 31, 2020 and 2019 20202019Change% ASSETS Cash$92,000$45,000 Accounts receivable84,00092,000 Merchandise inventory102,000118,000 Prepaid expenses8,0006,000 Property, plant and equipment498,000474,000 Accumulated amortization106,00070,000 Goodwill40,00040,000 Total Assets$718,000$705,000 LIABILITIES Accounts payable$30,100$43,000 Notes payable (due in 30 days)3,00010,000 Mortgage payable68,800130,000 Total liabilities101,900183,000 SHAREHOLDERS' EQUITY Preferred shares (1,250 shares;$20 callable at $210 per share $240,000$240,000 Common shares (2020 - 12,000shares; 2019 - 6,000 shares 168,000120,000 Retained Earnings208,100162,000 Total shareholders; equity616,100522,000 Total liabilities and shareholders'equity $718,000$705,000 1
Financial Statement Analysis Waterloo Chip Ltd. Vertical Income Statement Analysis December 31, 2020 AMOUNT% Net sales$945,000 Cost of goods sold610,000 Gross margin335,000 Operating expenses: Selling expenses128,200 Administrative expenses78,000 Interest expense22,000 Total operating expenses228,200 Operating income106,800 Income tax26,700 Net income$80,100 Horizontal Analysis Comments Vertical Analysis Comments Calculate the following ratio for the year ended December 31, 2020. Current Ratio with anindustry standard of 3.14 Current Ratio = Current Assets ÷ Current Liabilities Accounts Receivable turnover in days =collect within 30 days Net Credit Sales ÷ Average Net Accounts Receivable and then 365 divided by that amount of times 2Calculation and analysis:
Financial Statement Analysis Debt ratio with an industry standard of.50 or 50% Debt Ratio = Total Liabilities ÷ Total Assets 3Calculation and analysis: Calculation and analysis:
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