Question 4 (Ratio analysis over time) The following information comes from the accounting records of Hercep Ltd. for the first three years of its existence: 2018 2019 2020 Statement of Financial Position Assets Cash Accounts receivable Inventory Capital assets (net) Other assets $22,800 $19,300 $27,500 66,900 58,500 149,000 114,000 147,000 222,000 460,000 235,000 201,000 266,800 $858,700 $893,800 $1,125,300 420,000 468,000 Liabilities and equity Accounts payable Long-term debt Common shares Retained earnings $115,000 $57,500 $115,000 180,000 230,000 460,000 512,000 512,000 512,000 38,300 $858,700 $893,800 $1,125,300 51,700 94,300 Statement of Earnings Sales Cost of goods sold Other expenses $650,000 $755,000 $975,000 (377,000) (513,400) (682,500) (164,000) (225,000) (223,000) 69,500 (32,700) (4,980) (20,850) $76,300 $11,620 $48,650 109,000 16,600 Income tax Net income (a1) Your answer is correct. Based on above information, analyze the chanoes in the company's profitability and liquidity, in addition to the management o accounts receivable and inventory rom 2018 to 2020 Round answers to 1 decima, place, eg. 13.5% or 13.5.) Sales Cost af goods sold Gross margin Other expenses 42 32 25 29 Income taxes 2.1 Net income Current Ratio Quick Ratio A/R Turnover Average Collection Period Inventary Turnaver Days to 5ell Inventory 9.4 times 9.3mes 37.6 days 3.3 times 110.4 days 12.0 times 30.3 days .times 92.8 days 98.7 days (b1) Your answer is partially correct. Try again Based on the above information, analyze the company's use of leverage from 2018 to 2020. (Round answers to 1 decimal place, eg, 15.1%.) 2018 2019 2020 Debt to Equity Return on Assets 4.8 Return on Equity 13.5 2.0 8.4