ca4INSERT YOUR NAME & ID# IN THE HEADERCA#4Comparative financial Statements for Track Ltd are shown below.TRACK LTD, Income Statement, For the Year Ended 31-Dec.2014 2013Net sales $1,000,000 $940,000Cost of goods sold 650,000 635,000Gross profit 350,000 305,000Operating expenses 200,000 180,000Profit from operations 150,000 125,000Interest expense (net) 35,000 35,000Profit before income taxes 115,000 90,000Income tax expense 17,250 13,500Profit $97,750 $76,500TRACK LTD., Balance Sheet, 31-Dec. IN THE TWO BLANK LINES INSERT A FORMULA TO CALCULATECURRENT ASSETS & CURRENT LIABILITIES NOTE DON’T INCLUDE CELL WITH THE YEARAssets 2014 2013 2012 2014 2013Cash $50,000 $42,000 $33,000 QUICK ASSETS QUICK ASSETSAccounts receivable 100,000 87,000 77,000Inventories 240,000 200,000 150,000Prepaid expenses 25,000 31,000 30,000Long-term debt investments 180,000 100,000 50,000Land 75,000 75,000 75,000Building and equipment 570,000 600,000 660,000Total assets $1,240,000 $1,135,000 $1,075,000Liabilities and Shareholders’ EquityLiabilitiesNotes payable $125,000 $125,000 $125,000Accounts payable 160,750 140,000 71,000Accrued liabilities 52,000 50,000 20,000Bonds payable, due 2018 100,000 100,000 200,000Total liabilities 437,750 415,000 416,000Shareholders’ equityPreferred shares 200,000 200,000 200,000Common shares (100,000 issued) 300,000 300,000 300,000Retained earnings 302,250 220,000 159,000Total shareholders’ equity 802,250 720,000 659,000Total liabilities and shareholders’ equity $1,240,000 $1,135,000 $1,075,000Additional information.1. All sales are on account.2.Cash provided from operating activities for was $133,500 in 2014 and $180,500 in 2013.3. Cash used by investing activities was $110,000 in 2014 and $51,660 in 2013.Instructions USE CELL FORMULAE NOT NUMBERS WHEREEVER POSSIBLE(a) Calculate the following ratios for 2013 and 2014. Indicate whether the change was Favourable (F)or Unfavourable (U).(b) Explain whether the liquidity, solvency and profitability has improved or not and why?.Ratio 2014 2013 Comparison (F),(U)Current ratioAcid-test ratioReceivables turnoverInventory turnoverDebt to total assetsRatio 2014 2013 Comparison (F),(U)Interest coverageFree cash flowProfit marginAsset turnoverReturn on assets(b) Explain whether the liquidity, solvency and profitability has improved or not and why?.
