Below are the balance sheets and income statements for Penticton Inc. (Penticton) for 2016 and 2017.

Required:
a. Calculate the following for Penticton for 2017 and 2016:
i. working capital
ii. current ratio
iii. debt-to-equity ratio
iv. gross margin
v. gross margin percentage
b. Explain why the amounts you calculated in (a) changed from 2016 to 2017.
c. Comment on Penticton's liquidity position on December 31, 2017. As a prospective lender of money to Penticton, what concerns would you have about its current liquidity position?
d. What could Penticton's management do to improve liquidity?

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Penticton Inc. Balance Sheets As of December 31 2017 2016 2017 2016 Assets Cash Accounts receivable Inventory Liabilities and shareholders' equity S 5,000 S 10,000 Bank loan S 100,000 75,000 200,000 150,000 205,000 5,000 Accounts payable 264,200 225,000 Deposits from customers for future delivery of goods 42,000 35,000 250,000 150,000 60,000 Long-term debt Long-term receivable- due 2020 Property and equipment 60,000 Shareholders' equity: (net of accumulated depreciation) Common shares 260,000 250,000 720,000 530,000 Other non-current assets 75,000 100,000 Retained earnings 40,200 413,000 37,000 Accumulated other comprehensive income Total liabilities and 27,000 Total assets S1,329,200 S1,100,000 shareholders equityS1329,200 S1,100,000 Penticton Inc. Income Statements For the Years Ended December 31 2017 2016 Revenue Cost of goods sold Selling, general, and administrative expense:s Depreciation expense Interest expense Tax expense Net income Other comprehensive income Comprehensive income S2,475,000 1,350,000 550,000 120,000 125,000 132,000 $ 198,000 10,000 208,000 $1,925,000 1,098,000 495,000 100,000 120,000 44,800 S 67,200 7,500 S 74,700