Question 10.1 (Total: 26 marks)

Data for the most recent four fiscal years of Jingle Cats Corp. are given below:

2023 2022 2021 2020

Net sales $83,000 $75,000 $67,000 $60,000

Cost of goods sold 34,000 32,000 30,000 26,000

Gross margin $49,000 $43,000 $37,000 $34,000

Operating expenses 26,000 22,000 19,000 14,000

Net income $23,000 $21,000 $18,000 $20,000

Required

1. Prepare an analysis showing the trend percentages for the four-year period using 2017 as the base year.
2. What do the trend percentages indicate regarding Jingle Cats Corp.'s income statement data?

Question 10.3 (Total: 36 marks)

Following is a comparative balance sheet for Safari Corporation:

Safari Corporation

Comparative Balance Sheet

December 31, 2023 and 2022

2023 2022

Current assets:

Cash $ 140,000 $ 90,000

Short-term investments 90,000 80,000

Accounts receivable, net 350,000 220,000

Inventory 500,000 430,000

Prepaid expenses 30,000 30,000

Total current assets $1,110,000 $ 850,000

Property, plant, and equipment, net 750,000 500,000

Other assets 280,000 300,000

Total assets $2,140,000 $1,650,000

Current liabilities:

Short-term notes payable $650,000 $670,000

Accounts payable 200,000 225,000

Total current liabilities $850,000 $895,000

Non-current debt 380,000 220,000

Total liabilities $1,230,000 $1,115,000

Shareholders' equity:

Common shares $500,000 $500,000

Retained earnings 410,000 35,000

Total shareholders' equity $ 910,000 $535,000

Total liabilities and shareholders' equity $2,140,000 $1,650,000

Notes: Net sales (all on credit) and cost of goods sold for the year ended December 31, 2023 were $2,000,000 and $1,200,000, respectively. The number of common shares outstanding has been 50,000 since the company began operations.

Calculate the following ratios for the year ended December 31, 2023:

Required

1. current ratio
2. acid-test ratio
3. inventory turnover
4. accounts receivable turnover
5. debt ratio
6. book value per common share of stock

Question 10.4 (Total: 20 marks)

River Rocks Inc. operates a large quarry in Central Ontario. Selected data from River Rocks for the year ended December 31, 2023 are presented below:

Total assets $1,600,000

Average total assets 1,500,000

Net earnings 123,200

Net sales 1,200,000

Average common shareholders' equity 1,000,000

Net cash provided by operating activities 280,000

Required

1. Calculate the profit margin and return on assets for River Rocks for the year ended December 31, 2023.
2. Comment on the ratios you prepared in part 1 assuming the following averages for the quarry industry:

Profit margin 8%

Return on Assets 14%