Presented below is the condensed financial statements of Williams Enterprise Ltd. for the year ended December 31, 2019. Consolidated Statement of Earnings For the years ended December 31, 2019 and December 31, 2018 2019 2018 ($ millions except where otherwise indicated) Sales $ 30,997 $ 30,735 Cost of Merchandise Inventories Sold (note 9) 23,393 23,539 Gross Profit 7,604 7,196 Operating Expenses Selling and administrative expenses 5,680 5,402 Depreciation and amortization 655 589 6,335 5,991 Operating Income 1,269 1,205 Interest expense and other financing charges (note 4) 273 269 Earnings Before Income Taxes and Minority Interest 996 936 Income Taxes (note 5) 297 269 Net Earnings Before Minority Interest 699 667 Minority Interest 18 11 Net Earnings $ 681 $ 656 Net Earnings Per Common Share ($) (note 6) Basic $ 2.45 $ 2.39 Diluted $ 2.44 $ 2.38 Consolidated Statement of Financial Position As at December 31, 2019 and December 31, 2018 ($ millions) 2019 2018 Assets Current Assets Cash and cash equivalents (note 7) $ 932 776 Short term investments 735 614 Accounts receivable (note 8) 724 774 Inventories (note 9) 2,114 2,112 Prepaid expenses and other assets 121 130 Total Current Assets 4,626 4,406 Fixed Assets (note 10) 9,123 8,559 Goodwill and Intangible Assets (notes 11) 1,029 1,026 Security Deposits 354 250 Other Assets (note 12) 787 750 Total Assets $ 15,919 $ 14,991 Liabilities Current Liabilities Notes Payable 803 802 Accounts payable and accrued liabilities 2,116 2,179 Compensation to employees 400 200 Income taxes payable (note 5) 30 41 Long term debt due within one year (note 15) 303 243 Total Current Liabilities 3,852 3,665 Long Term Debt (note 15) 4,213 4,162 Other Liabilities (note 16) 534 497 Future Income Taxes (note 5) 178 143 Capital Securities (note 18) 221 220 Minority Interest 41 31 Total Liabilities 9,039 8,718 Shareholders’ Equity Common Share Capital (note 19) 1,475 1,308 Retained Earnings 5,395 4,948 Accumulated Other Compre. Inc (notes 2 and 22) 10 17 Total Shareholders’ Equity 6,880 6,273 Total Liabilities and Shareholders’ Equity $ 15,919 $ 14,991 (a)What might be the items that comprise Williams’ liability for “Compensation to employees”? (b) Evaluate the company’s liquidity and financial flexibility by calculating and analysing the following ratios for 2019. (i) Current ratio at December 31. (ii) Acid-test ratio at December 31. (iii)Accounts receivable turnover. (iv)Inventory turnover. (v) Return on assets. (vi)Profit margin on sales.
Presented below is the condensed financial statements of Williams Enterprise Ltd. for
the year ended December 31, 2019.
Consolidated Statement of Earnings
For the years ended December 31, 2019 and December 31, 2018 2019 2018
($ millions except where otherwise indicated)
Sales $ 30,997 $ 30,735
Cost of Merchandise Inventories Sold (note 9) 23,393 23,539
Gross Profit 7,604 7,196
Operating Expenses
Selling and administrative expenses 5,680 5,402
Depreciation and amortization 655 589
6,335 5,991
Operating Income 1,269 1,205
Interest expense and other financing charges (note 4) 273 269
Earnings Before Income Taxes and Minority Interest 996 936
Income Taxes (note 5) 297 269
Net Earnings Before Minority Interest 699 667
Minority Interest 18 11
Net Earnings $ 681 $ 656
Net Earnings Per Common Share ($) (note 6)
Basic
$ 2.45
$ 2.39
Diluted $ 2.44 $ 2.38
Consolidated Statement of Financial Position
As at December 31, 2019 and December 31, 2018
($ millions) 2019 2018
Assets
Current Assets
Cash and cash equivalents (note 7)
$ 932 776
Short term investments 735 614
Inventories (note 9) 2,114 2,112
Prepaid expenses and other assets 121 130
Total Current Assets 4,626 4,406
Fixed Assets (note 10) 9,123 8,559
Goodwill and Intangible Assets (notes 11) 1,029 1,026
Security Deposits 354 250
Other Assets (note 12) 787 750
Total Assets $ 15,919 $ 14,991
Liabilities
Current Liabilities
Notes Payable
803 802
Accounts payable and accrued liabilities 2,116 2,179
Compensation to employees 400 200
Income taxes payable (note 5) 30 41
Long term debt due within one year (note 15) 303 243
Total Current Liabilities 3,852 3,665
Long Term Debt (note 15) 4,213 4,162
Other Liabilities (note 16) 534 497
Future Income Taxes (note 5) 178 143
Capital Securities (note 18) 221 220
Minority Interest 41 31
Total Liabilities 9,039 8,718
Shareholders’ Equity
Common Share Capital (note 19)
1,475 1,308
Retained Earnings 5,395 4,948
Accumulated Other Compre. Inc (notes 2 and 22) 10 17
Total Shareholders’ Equity 6,880 6,273
Total Liabilities and Shareholders’ Equity $ 15,919 $ 14,991
(a)What might be the items that comprise Williams’ liability for “Compensation to
employees”?
(b) Evaluate the company’s liquidity and financial flexibility by calculating and
analysing the following ratios for 2019.
(i)
(ii) Acid-test ratio at December 31.
(iii)Accounts receivable turnover.
(iv)Inventory turnover.
(v) Return on assets.
(vi)Profit margin on sales.
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