Question

Windsor Corporation was formed 5 years ago through a public subscription of common stock. Daniel Brown, who owns 15% of the common stock, was one of the organizers of Windsor and is its current president. The company has been successful, but it currently is experiencing a shortage of funds. On June 10, 2021, Daniel Brown approached the Topeka National Bank, asking for a 24-month extension on two $34,970 notes, which are due on June 30, 2021, and September 30, 2021. Another note of $5,970 is due on March 31, 2022, but he expects no difficulty in paying this note on its due date. Brown explained that Windsor’s cash flow problems are due primarily to the company’s desire to finance a $300,080 plant expansion over the next 2 fiscal years through internally generated funds.

The commercial loan officer of Topeka National Bank requested the following financial reports for the last 2 fiscal years.

Windsor Corporation Balance Sheet March 31
Assets		2021		2020
Cash		$18,120		$12,410
Notes receivable		147,220		132,930
Accounts receivable (net)		130,790		124,530
Inventories (at cost)		104,940		49,570
Plant & equipment (net of depreciation)		1,446,500		1,416,510
Total assets		$1,847,570		$1,735,950
Liabilities and Owners’ Equity
Accounts payable		$79,360		$90,220
Notes payable		75,910		61,040
Accrued liabilities		8,250		2,550
Common stock (130,000 shares, $10 par)		1,296,650		1,312,800
Retained earningsa		387,400		269,340
Total liabilities and stockholders’ equity		$1,847,570		$1,735,950
aCash dividends were paid at the rate of $1 per share in fiscal year 2020 and $2 per share in fiscal year 2021.

Windsor Corporation Income Statement For the Fiscal Years Ended March 31
		2021		2020
Sales revenue		$2,994,540		$2,716,340
Cost of goods solda		1,536,450		1,415,660
Gross margin		1,458,090		1,300,680
Operating expenses		856,120		784,640
Income before income taxes		601,970		516,040
Income taxes (40%)		240,788		206,416
Net income		$361,182		$309,624
aDepreciation charges on the plant and equipment of $99,960 and $101,650 for fiscal years ended March 31, 2020 and 2021, respectively, are included in cost of goods sold.

(a)

Compute the following items for Windsor Corporation. (Round answers to 2 decimal places, e.g. 2.25 or 2.25%.)

1.		Current ratio for fiscal years 2020 and 2021.
2.		Acid-test (quick) ratio for fiscal years 2020 and 2021.
3.		Inventory turnover for fiscal year 2021.
4.		Return on assets for fiscal years 2020 and 2021. (Assume total assets were $1,705,230 at 3/31/19.)
5.		Percentage change in sales, cost of goods sold, gross margin, and net income after taxes from fiscal year 2020 to 2021.

Answer 1