50.1K
Verified Solution
Link Copied!
Refer the following table.
| Focus Metals Inc. |
| Comparative Balance Sheet Information |
| November 30 |
| (millions of $) |
| | 2020 | 2019 |
| Cash | $ | 33 | $ | 103 |
| Accounts receivable (net) | | 454 | | 300 |
| Inventory | | 94 | | 87 |
| Plant and equipment (net) | | 2,886 | | 2,970 |
| Accounts payable | | 347 | | 263 |
| Long-term notes payable* | | 1,870 | | 2,430 |
| Common shares | | 470 | | 470 |
| Retained earnings | | 780 | | 297 |
| |
*90% of the plant and equipment are secured by long-term notes payable.
| Focus Metals Inc. |
| Income Statement |
| For Year Ended November 30 |
| (millions of $) |
| | 2020 | 2019 |
| Net sales | $ | 3,090 | | $ | 2,292 | |
| Cost of goods sold | | 1,072 | | | 862 | |
| Gross profit | $ | 2,018 | | $ | 1,430 | |
| Operating expenses: | | | | | | |
| Depreciation expense | $ | 122 | | $ | 122 | |
| Other expenses | | 795 | | | 662 | |
| Total operating expenses | | 917 | | | 784 | |
| Profit from operations | $ | 1,101 | | $ | 646 | |
| Interest expense | | 195 | | | 229 | |
| Income tax expense | | 61 | | | 65 | |
| Profit | $ | 845 | | $ | 352 | |
| |
Required: Calculate Focus Metals solvency ratios for 2019 and 2020. (Round the final answers to 2 decimal places.)
Analysis Component: Identify whether the change in each ratio from 2019 to 2020 was favourable or unfavourable.
Answer & Explanation
Solved by verified expert
