Magnotta Winery Corporation has vineyards in Ontario and Chile, and produces, imports, exports, and retails beer and

Question:

Magnotta Winery has vineyards in Ontario and Chile, and produces, imports, exports, and retails beer and spirits, as well as wine and ingredients for making wine. The company's 2010 are shown in Exhibits 2-13A, B and C on pages 136 to 138.
In Exhibits 2-13A
Consolidated Statement Of Earnings
Comprehensive Income and Retained Earnings.

Magnotta Winery Corporation has vineyards in Ontario and Chile, and

Required:
a. Prepare a common size income statement for both 2010 and 2009 and comment on any significant changes.
b. Analyze the company's liquidity by calculating the following ratios for 2010 and 2009:
i. Current ratio
ii. Quick ratio
iii. Accounts receivable turnover
iv. Inventory turnover
v. Accounts payable turnover
c. How does the nature of the business that Magnotta Winery is in help you to explain the ratios calculated in part "b"? Based on the accounts receivable turnover, what credit terms do you think Magnotta Winery offers its customers?
d. The market prices of Magnotta Winery's shares on January 31, 2010 and 2009 were $1.70 and $1.40, respectively. What were the price/earnings multiples for those dates? If the P/E multiple had stayed at the 2009 level, what would the share price have been on January 31, 2010?

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