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The comparative balance sheets of Waterways Corporation's Irrigation Installation Division for the years 2021 and 2022 and the income statements for the year 2021 and 2022 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-INSTALLATIONDIVISION Balance Sheets December 31 \begin{tabular}{|c|c|c|} \hline Assets & 2022 & 2021 \\ \hline \multicolumn{3}{|l|}{ Current assets } \\ \hline Cash & $831,600 & $748,100 \\ \hline Accounts receivable & 687,500 & 546,200 \\ \hline Work in process & 703,500 & - \\ \hline Inventory & 16,800 & 7,500 \\ \hline Prepaid expenses & 76,600 & 42,700 \\ \hline Total current assets & 2,316,000 & 1,344,500 \\ \hline \multicolumn{3}{|l|}{ Property, plant, and equipment } \\ \hline Land & 298,000 & 298,000 \\ \hline Buildings & 447,000 & 447,000 \\ \hline Equipment & 929,100 & 798,600 \\ \hline Furnishings & 40,700 & 40,700 \\ \hline Accumulated depreciation & (478,600) & (487,700) \\ \hline Total property, plant, and equipment & 1,236,200 & 1,096,600 \\ \hline Total assets & $3,552,200 & $2,441,100 \\ \hline \end{tabular} Liabilities and Stockholders' Equity Current liabilities \begin{tabular}{|c|c|c|} \hline Accounts payable & $157,400 & $129,700 \\ \hline Income taxes payable & 100,900 & 79,200 \\ \hline Wages payable & 4,600 & 2,000 \\ \hline Interest payable & 1,200 & - \\ \hline Other current liabilities & 14,400 & 15,400 \\ \hline Revolving bank loan payable & 15,100 & - \\ \hline Total current liabilities & 293,600 & 226,300 \\ \hline \end{tabular} Long-term liabilities Note payable Total liabilities Stockholders' equity \begin{tabular}{|c|c|c|} \hline Common stock & 1,250,000 & 1,250,000 \\ \hline Retained earnings & 1,866,600 & 964,800 \\ \hline Total stockholders' equity & 3,116,600 & 2,214,800 \\ \hline Total liabilities and stockholders' equity & $3,552,200 & $2,441,100 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|} \hline \multicolumn{4}{|c|}{\begin{tabular}{c} Income Statements \\ For the Year Ending December 31 \end{tabular}} \\ \hline & & 2022 & 2021 \\ \hline Sales & & $5,522,786 & $4,922,500 \\ \hline Less: Cost of goods sold & & 3,118,400 & 2,820,400 \\ \hline Gross profit & & 2,404,386 & 2,102,100 \\ \hline \multicolumn{4}{|l|}{ Operating expenses } \\ \hline Advertising & & 49,600 & 47,600 \\ \hline Insurance & & 401,800 & 401,800 \\ \hline Salaries and wages & & 585,300 & 555,300 \\ \hline Depreciation & & 64,200 & 55,200 \\ \hline Other operating expenses & & 21,000 & 18,401 \\ \hline Total operating expenses & & 1,121,900 & 1,078,301 \\ \hline Income from operations & & 1,282,486 & 1,023,799 \\ \hline \multicolumn{4}{|l|}{ Other income } \\ \hline Gain on disposal of plant assets & & 17,900 & - \\ \hline \multicolumn{4}{|l|}{ Other expenses } \\ \hline Interest expense & & (12,100) & - \\ \hline Income before income tax & & 1,288,286 & 1,023,799 \\ \hline Income tax expense & & 386,486 & 307,140 \\ \hline Net income & & $901,800 & $716,659 \\ \hline \end{tabular} Prepare a horizontal analysis of the income statement using 2021 as the base year. (Do not leave any answer field blank. Enter 0 for amounts. Round percentage values to 1 decimal place, e.g. 52.7\%. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{\begin{tabular}{l} WATERWAYS CORPORATION-INSTALLATION DIVISION \\ Income Statement \end{tabular}} \\ \hline & Amount & Percent \\ \hline Sales & $5,522,786 & \\ \hline Less: Cost of goods sold & 3,118,400 & \\ \hline Gross profit & 2,404,386 & \\ \hline Operating expenses & & \\ \hline Advertising & 49,600 & \\ \hline Insurance & 401,800 & \\ \hline Salaries and wages & 585,300 & \\ \hline Depreciation & 64,200 & \\ \hline Other operating expenses & 21,000 & \\ \hline Total operating expenses & 1,121,900 & \\ \hline Income from operations & 1,282,486 & \\ \hline \end{tabular} Other income Gain on disposal of plant assets 17,900 % Other expenses \begin{tabular}{lr} \multicolumn{1}{c}{ Interest expense } & (12,100) \\ \cline { 2 - 2 } Income before income tax & 1,288,286 \\ Income tax expense & 386,486 \\ & $901,800 \\ \hline \hline \end{tabular} % % % % (c) 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.) Comment on your findings. The company's liquidity is The company's solvency is very Profitability : The company's profitability is By all measures the company appears to be both financially

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