Refer to Exhibit 17.14 and calculate Focus Metals? solvency ratios for 2019 and 2020 (round answers to two decimal places).

Analysis Component: Identify whether the change in each ratio from 2019 to 2020 was favourable (F) or unfavourable (U) and why.

Exhibit 17.14

Transcribed Image Text:

Focus Metals Inc. Focus Metals Inc. Comparative Balance Sheet Information Income Statement November 30 For Year Ended November 30 (millions of $) (millions of $) 2020 2019 2020 2019 Cash $2,520 $1,722 14 84 Net sales.. Cost of goods sold. Gross profit. Accounts receivable (net) 378 224 882 672 Inventory. Plant and equipment (net). $1,638 $1,050 56 49 2,590 2,506 Operating expenses: Depreciation expense Accounts payable. 252 168 84 84 1,680 2,240 Other expenses. 700 Long-term notes payable". 567 Common shares. Retained earnings. 280 Total operating expenses. 280 784 651 $ 854 $ 399 Profit from operations 742 259 Interest expense. 100 134 *90% of the plant and equipment are secured by long-term notes payable. Income tax expense 42 46 $ 712 $ 219 Profit. %24 Ratio Formula Measure of: Liquldity and Efficlency Current assets Current ratio Current labilitles Current debt-paylng ability Cash + Investments (Current) + Net current recelvables Quick ratio Immedlate current debt-paying ability Current labilities Net sales Accounts recelvable turnover Liquidity and efficlency of collection Average net accounts recelvable Accounts recelvable Days' sales uncollected x 365 Liquidity of recelvables Net sales Cost of goods sold Inventory turnover Liquidity and efficlency of Inventory Average Inventory Ending Inventory Days' sales in Inventory x 365 Cost of goods sold Liquidity of Inventory Net sales (or revenues) Total asset turnover Efficlency of assets in producing sales Average total assets Cost of goods sold Accounts payable turnover Efficiency in paylng trade creditors Average accounts payable Solvency Total liabilities Debt ratio x 100% Creditor financing and leverage Total assets Total equity Equity ratio -x 100% Owner financing Total assets Book value of pledged assets Pledged assets to secured liabilitles Protection to secured creditors Book value of secured liabilities Income before Interest and taxes Times Interest earned Protection in meeting Interest payments Interest expense Profitability Profit Profit margin -x 100% Profit in each sales dollar Net sales (or revenues) Gross profit from sales Net sales Gross profit ratio x 100% Gross profit in each sales dollar Profit Return on total assets x 100% Overall profitability of assets Average total assets Profit – Preferred dividends Return on common shareholders' equity x 100% Profitability of owner's Investment Average common shareholders' equlty Equity applicable to common shares Book value per common share Liquidation at reported amounts Number of common shares outstanding Equity applicable to preferred shares Book value per preferred share = Liquidation at reported amounts Number of preferred shares outstanding Profit - Preferred dividends Earnings per share Profit on each common share Weighted-average common shares outstanding Market Market price per share Earnings per share Price-earnings ratio Market value based on earnings Annual dividends per share Market price per share Dividend yleld -x 100% Cash return to each share