Manutech Ltd.'s industrial product sales were down in 2017. Fortunately, after investing in a customer relationship management system, it was able to turn its operations around in 2018. Selected financial statements follow:

Additional information for 2018:
1. Assume all sales were credit sales.
2. Manutech has no bad debts and no allowance for doubtful accounts.
3. Property, plant, and equipment increased in 2018 by the $300,000 cost of a new customer relationship management system and decreased by additional accumulated depreciation for the year of $165,000.
4. $20,000 of the mortgage was repaid in 2018.
5. Cash dividends paid during the year amounted to $170,000.
Instructions
(a) Using vertical analysis, calculate the percentage of the base amount for the income statement for 2017 and 2018. Use the results to answer the following question from management: "We know that the sales volume has increased, but we don't know if gross profit and net income are increasing in proportion to sales." Identify the primary reason(s) for the change between the two years.
(b) Calculate the various liquidity ratios for 2018 and compare the company's results with the industry average. The industry average for the current ratio is 2.0:1, for the average collection period it is 28 days, and for days in inventory it is 40 days. 

(c) Calculate the various solvency ratios for 2018 and compare the company's results with the industry average. The industry average for debt to total assets is 50% and that for times interest earned is 5.0 times.
(d) Calculate the various profitability ratios for 2018 and compare the company's results with the industry average. The industry average for gross profit margin is 44.5%, and for the profit margin it is 15.1%. Similarly, the industry average for asset turnover is 0.8 times and for return on assets it is 12.5%.
(e) After a review of the financial statements, the vice-president is surprised that the cash balance reported on the statement of financial position at year end is not higher, since financial performance improved and net cash provided by operating activities was determined to be $355,500. Prepare the investing and financing activities sections of the statement of cash flows for 2018 to explain where the cash has been used.

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MANUTECH LTD Income Statement Year Ended December 3:1 2018 2017 Net sales $1,470,000 $1,100,000 Cost of goods sold 735,000 655,0o00 735,000 445,000 313,500270,000 421,500175,000 53,600 Income before income tax 360,0o0121,400 30,350 270,000S 91,050 Gross profit Operating expenses Income from operations Interest expense 61,500 Income tax expense Net Income 90,000 MANUTECH LTD Statement of Financial Position December 31 2018 2017 Assets Current assets Cash Accounts receivable Total current assets Property, plant, and equipment (net) Intangible assets Total assets $ 30,000 79,500 150,000 105,000 Inventory112,00090,000 292,000 274,500 1,100,000 965,o00 120,000o $1,512,00o $1,359,500 120,000o ia Liabilities Current liabilities Accounts payable Accrued liabilities Bank loan payable Mortgage payable-current portion Total current liabilities Mortgage payable Total liabilities Shareholders' equity Common shares, 10,000 shares issued Retained earnings Total shareholders' equity Total liabilities and shareholders' equity ies 1o $ 65,000 72,500 15,000 20,000 85,000 20,000 185,000 112,500 630,000 650,o00 815,000762,500 20,000 100,00O 597,000 497,000 697000597,000 $1,512,000 $1,359,500 100.000