The following information relates to Arte’s Gallery. The owner, P Arte, is concerned about the profitability and liquidity of the business.

ARTE’S GALLERY

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2012

Capital P. Arte 1 July 2011 …………………………….     $192 900

LessLoss ……………………………………………….                    84 300

                                                                                         108 600

LessDrawings ………………………………………….                    4,000

Capital P Arte 30 June 2012 …………………………          $104 600

Additional Information:

All Sales were on credit.

Required:

(a) Calculate the following ratios for 2011 and 2012. Show all calculations. (Where an average figure is not available, add this as a comment.)

Profit Margin                                      Gross Profit margin

Current Ratio                                      Quick Ratio

Receivables Turnover                          Average Collection Period

Inventory Turnover

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ARTE'S GALLERY INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2012 30 JUNE 2011 INCOME Sales revenue S293 500 S 950 10 000 less Sales Retums and Allow Discount Allowed 10 950 Net Sales Revenue 282 550 S250 550 Less Cost of Sales Inventory 1 July 2011 add Purchases 80 250 $156 000 12 150 add Freight Inwards 168 150 2 000 less Discount Received 166 150 Net Cost of Purchases Cost of Goods Avail for Sale 246 400 50 000 less Inventory 30 June 2012 Cost of Sales 196 400 86 150 167 800 GROSS PROFIT LESS EXPENSES Selling and Distribution Freight Outwards Sales Staff Wages Advertising Shop Rent Depreciation Shop shelving 11 800 120 000 4 700 22 000 7 000 165 500 Administrative 1150 Local govemment taxes Insurance 2 400 3 550 Financial Interest Expense 1 400 170 450 S(84 300) 162 410 LOSS