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The 2020 financial statements of Outdoor Waterworks Inc. follow:

Outdoor Waterworks Inc.
Income Statement
For Year Ended December 31, 2020
Net sales	$	1,126,000
Cost of goods sold:
Inventory, Dec. 31, 2019	$	83,360
Purchases		616,840
Goods available for sale	$	700,200
Inventory, Dec. 31, 2020		61,440
Cost of goods sold		638,760
Gross profit from sales	$	487,240
Operating expenses		289,360
Operating profit	$	197,880
Interest expense		13,000
Profit before taxes	$	184,880
Income taxes		19,664
Profit	$	165,216

Outdoor Waterworks Inc.
Balance Sheet
December 31, 2020
Assets
Cash	$	23,800
Current non-strategic investments		26,400
Accounts receivable, net		53,680
Notes receivable		12,160
Inventory		61,440
Prepaid expenses		6,080
Plant and equipment, net		334,520
Total assets	$	518,080
Liabilities and Equity
Accounts payable	$	49,480
Accrued wages payable		6,560
Income taxes payable		7,440
Long-term note payable, secured by mortgage on plant		118,800
Common shares, 160,000 shares		200,000
Retained earnings		135,800
Total liabilities and equity	$	518,080

Assume all sales were on credit. Also assume the long-term note payable is due in 2023, with no current portion. On the December 31, 2019, balance sheet, the assets totalled $440,720, common shares were $200,000, and retained earnings were $112,440. Required: Calculate the following: (Use 365 days in a year. Do not round your intermediate calculations. Round the answers to 2 decimal places.)

	a. Current ratio to 1 b. Quick ratio to 1 c. Days sales uncollected days d. Inventory turnover times e. Days sales in inventory days f. Ratio of pledged plant assets to secured liabilities to 1 g. Times interest earned times h. Profit margin % i. Total asset turnover times j. Return on total assets % k. Return on common shareholders equity %

Analysis Component: Identify whether the ratios calculated above are favourable or unfavourable to the industry averages.

	Industry Average a. Current ratio 1.6:1 b. Quick ratio 1.1:1 c. Days sales uncollected 21 days d. Inventory turnover 5 times e. Days sales in inventory 70 days f. Ratio of pledged plant assets to secured liabilities 1.4:1 g. Times interest earned 50 times h. Profit margin 14 % i. Total asset turnover 2.3 times j. Return on total assets 20 % k. Return on common shareholders equity 32.7 %

Unfavourable

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