for Inventory Turnover rate and Days Inventory held (note how long the business has been in operation) - 3 months

1. Use the following template to prepare an email to the partners. Your email should be based on the financial reports you prepared above and include the following:
   • Current ratio
   • Quick ratio
   • Gross prot ratio
   • Net prot rate
   • Inventory turnover (assume when calculating average inventory, the Opening Inventory = $0)
   • Days inventory is held
   • Make three suggested changes the partners could make that would help business growth. For each, describe how it will benet the business in the longer term.
   • Explain the advantages and disadvantages of the ratio analysis you have completed
   • Comment on how the liquidity, protability and activity of the business compares with the following industry averages:

Ratio name	Industry Averages
Current ratio	2:1
Quick ratio	1.38:1
Inventory turnover rate	5 times
Average days inventory is held	61 days
Gross profit rate	34%
Net profit rate	12%

Income statement
3 months ended 30 June 2022
	$	$	$
Sales			35,680.00
Less COGS
Purchases		22,160.00
Packaging		754.00
Cost of Goods available for sale		22,914.00
Less: Closing inventory		- 9,334.00	13,580.00
Gross Profit			22,100.00
Less: Operating expenses
Marketing and distribution
Advertising	480.00
Delivery Costs	502.00	982.00
Administration
Accounting Fees	542.00
Depreciation	360.00
Insurance	375.00
Order Costs	714.00
Rent	1,200.00
Telephone and Internet	1,007.00
Website Maintenance	420.00	4,618.00
Total Expenses			5,600.00
Net Profit			16,500.00
To James Cross			5,500
To Leona Riley			5,500
To Brady Chan			5,500

Balance sheet
as at 30 June 2022
	$	$	$
Current Assets
Cash		39,681.10
Inventory		9,334.00
Prepaid Insurance		1,125.00	50,140.10
Non-Current Assets
Equipment	5,000.00
Equipment Depreciation	-250.00	4,750.00
Furniture	800.00
Furniture Depreciation	-20.00	780.00
Software	1,800.00
Software Depreciation	-90.00	1,710.00
Total Non-Current Assets			7,240.00
Total Assets			57,380.10
Current Liabilities
GST Collected	3,568.00
Less: GST Paid	-3,187.90	380.10
Total Liabilities			380.10
Net Assets			57,000.00
Owners Equity
James Capital	15,000.00
James Current	4,000.00	19,000.00
Leona Capital	10,000.00
Leona Current	4,000.00	14,000.00
Brady Capital	15,000.00
Brady Current	4,000.00	19,000.00
Total Equity			57,000.00

	Cash flow statement
	3 months ended 30 June 2022
		$
	Cash Flows from Operating Activities
	Recipts from customers (including GST)	39,248.00
	Payments for inventory (including GST)	-25,205.40
	expenses paid (including GST)	-7,001.50
	GST paid on purchases of non-current assets	-260
	net cash from operating expenses	6,781.10
	Cash flows from investing activities
	payments for furnaiture	-800
	payments for software	-1,800.00
	net cash from investing activities	-2,600.00
	cash flows from financing activities
	capital invested by partners	40,000.00
	payments for drawings	-4,500.00
	net cash from finacing activities	35,500.00
	change in cash balance	39,681.10
	add: cash at start of period
	Cash at end of period	39,681.10