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a) Evaluate the company’s liquidity and financial flexibility by calculating and analysing the following ratios for 2019.   (i) Current ratio at December 31. (ii) Acid-test ratio at December 31. (iii)Accounts receivable turnover

a) Evaluate the company’s liquidity and financial flexibility by calculating and analysing the following ratios for 2019.   (i) Current ratio at December 31. (ii) Acid-test ratio at December 31. (iii)Accounts receivable turnover

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 48CE
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a) Evaluate the company’s liquidity and financial flexibility by calculating and analysing the following ratios for 2019.

 

(i) Current ratio at December 31.

(ii) Acid-test ratio at December 31.

(iii)Accounts receivable turnover.

(iv) Inventory turnover.

(v) Return on assets.

(vi) Profit margin on sales.

Presented below is the condensed financial statements of Williams Enterprise Ltd. for the year ended December 31, 2019. Consolidated Statement of Earnings 2019 2018 For the years ended December 31, 2019 and December 31, 2018 ($ millions except where otherwise indicated) Sales $ 30,997 $ 30,735 Cost of Merchandise Inventories Sold (note 9) 23,393 23,539 Gross Profit 7,604 7,196 Operating Expenses Selling and administrative expenses 5,680 5,402 Depreciation and amortization 655 589 6,335 5,991 Operating Income 1,269 1,205 Interest expense and other financing charges (note 4) 273 269 Earnings Before Income Taxes and Minority Interest 996 936 Income Taxes (note 5) 297 269 Net Earnings Before Minority Interest 699 667 Minority Interest 18 11 Net Earnings $ 681 2$ 656 Net Earnings Per Common Share ($) (note 6) Basic 2.45 $ 2.39 Diluted 2.44 2$ 2.38 %24 %24
Transcribed Image Text:Presented below is the condensed financial statements of Williams Enterprise Ltd. for the year ended December 31, 2019. Consolidated Statement of Earnings 2019 2018 For the years ended December 31, 2019 and December 31, 2018 ($ millions except where otherwise indicated) Sales $ 30,997 $ 30,735 Cost of Merchandise Inventories Sold (note 9) 23,393 23,539 Gross Profit 7,604 7,196 Operating Expenses Selling and administrative expenses 5,680 5,402 Depreciation and amortization 655 589 6,335 5,991 Operating Income 1,269 1,205 Interest expense and other financing charges (note 4) 273 269 Earnings Before Income Taxes and Minority Interest 996 936 Income Taxes (note 5) 297 269 Net Earnings Before Minority Interest 699 667 Minority Interest 18 11 Net Earnings $ 681 2$ 656 Net Earnings Per Common Share ($) (note 6) Basic 2.45 $ 2.39 Diluted 2.44 2$ 2.38 %24 %24
Consolidated Statement of Financial Position As a December 31, 2019 ad December 31, 2018 S miio) 2019 2018 Assets Current Assets Cash and cash equivalents (note 7) 932 フ76 Short term investments 735 614 Accounts receivable (note s) 724 774 Inventories (note 9) 2,114 2,112 Prepaid expenses and other assets 121 130 Total Current Assets 4,626 4,406 Fixed Assets (note 10) 9,123 8,559 Goodwill and Intangible Assets (notes 11) 1,029 1,026 Security Deposits 354 250 Other Assets (note 12) 787 750 Total Assets S 15,919 14,991 Liabilities Current Liabilities Notes Payable 803 so2 Accounts payable and accrued liabilities 2,116 2,179 Compensation to employees 400 200 Income taxes payable (note 5) 30 41 Long term debt due within one year (note 15) 303 243 Total Current Liabilities 3,852 3,665 Long Term Debt (note 15) 4,213 4,162 Other Liabilities (note 16) 534 497 Future Income Taxes (note 5) 178 143 Capital Securities (note 18) 221 220 Minority Interest 41 31 Total Liabilities 9,039 8,718 Shareholders' Equity common Share capital (note 19) 1,475 1,308 Retained Earnings 5,395 4,948 Accumulated Other Compre. Inc (notes 2 and 22) Total Shareholders Equity 10 17 6,880 6,273 Total Liabilities and Shareholders' Equity 15,919 14,991
Transcribed Image Text:Consolidated Statement of Financial Position As a December 31, 2019 ad December 31, 2018 S miio) 2019 2018 Assets Current Assets Cash and cash equivalents (note 7) 932 フ76 Short term investments 735 614 Accounts receivable (note s) 724 774 Inventories (note 9) 2,114 2,112 Prepaid expenses and other assets 121 130 Total Current Assets 4,626 4,406 Fixed Assets (note 10) 9,123 8,559 Goodwill and Intangible Assets (notes 11) 1,029 1,026 Security Deposits 354 250 Other Assets (note 12) 787 750 Total Assets S 15,919 14,991 Liabilities Current Liabilities Notes Payable 803 so2 Accounts payable and accrued liabilities 2,116 2,179 Compensation to employees 400 200 Income taxes payable (note 5) 30 41 Long term debt due within one year (note 15) 303 243 Total Current Liabilities 3,852 3,665 Long Term Debt (note 15) 4,213 4,162 Other Liabilities (note 16) 534 497 Future Income Taxes (note 5) 178 143 Capital Securities (note 18) 221 220 Minority Interest 41 31 Total Liabilities 9,039 8,718 Shareholders' Equity common Share capital (note 19) 1,475 1,308 Retained Earnings 5,395 4,948 Accumulated Other Compre. Inc (notes 2 and 22) Total Shareholders Equity 10 17 6,880 6,273 Total Liabilities and Shareholders' Equity 15,919 14,991
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