Requirement 1a - Ratio Analysis Please ensure you read the notes to the financial statements. Please calculate each of the following ratios for 2018 and 2019. Answers must be in the blue cells provided using formulas in Excel (do not use your calculator and input your final answer into Excel). 2019 2018 Current Assets / Current Liabilities |(Current Assets - Inventory - Prepaid Expenses)/Current Liabilities Liquidity Ratio Current Ratio Quick Ratio Activity Ratio Accounts Receivable Turnover Average Collection Period Inventory Turnover Days to Sell Inventory Accounts Payable Turnover Average Payment Period Solvency Ratios Debt to Equity Cash Flows to Total Liabilities Profitability Ratios Gross Margin Profit Margin Return on Equity Return on Assets Credit Sales / Average Accounts Receivable (net) 365 / Accounts Receivable Turnover Cost of Goods Sold / Average Inventory 365 days / Inventory Turnover Credit Purchases/ Average Accounts Payable 365 / Accounts Payable Turnover Net debt / Shareholders Equity Cashflows from Operating Activities / Total Liabilities Gross Margin / Sales Revenue Net Income / Sales Revenue Net Income / Average Total Shareholders Equity Net Income / Average Total Assets Perfect Smile Company Statement of Income For the year ended December 31 2019 Sales Revenue (Note 1) Cost of Goods Sold: Gross Margin $3,087,050 1,291,446 1,795,604 2018 $3,024,049 1,176,355 1,847,694 937,450 187,490 262,486 1,387,426 910,422 182,084 309,543 1,402,050 Operating expenses Sales and marketing expenses Occupancy expenses Administration expenses Total operating expenses Operating income Non-operating or other Gain (loss) on sale of land and building Interest (expense) income Total non-operating Income before tax Income tax expense Net Income (Loss): 183,081 17,956 201,037 207,141 46,607 160,535 17,824 18,477 36,301 409,343 96.196 313,147 Note 1: Management has determined that 80% of its sales were on credit in 2019, and 90% in 2018. Perfect Smile Company Statement of Changes in equity For the year ended December 31 2019 Retained earnings, January 1, 2018 717,224 Add: Net income 160,535 Less: Dividends declared -51,400 Retained earnings, December 31, 2019 826,358 2018 494,886 313,147 -90,810 717,224 2018 2017 118,446 619,291 15,384 815,360 1,568,481 152,853 330,000 15,371 733,824 1,232,048 Perfect Smile Company Statement of Financial Position As at December 31 2019 Assets Current assets: Cash 82,517 Accounts receivable, net (Note 2) 764,556 Prepaid expenses 17,116 Inventory 896,000 Total current assets 1,760,190 Non-Current Assets Marketable securities 500,000 Property plant & equipment, net 622,861 Total assets 2,883,051 Liabilities and shareholders' equity Current liabilities: Accounts payable 917,172 Unearned revenue 54,621 Bank loan, current portion 75,000 Total current liabilities 1,046,793 Non-Current liabilities: Bank loan payable 534,900 Total liabilities 1,581,693 Shareholders' equity Common shares 475,000 Retained earnings 826,358 Total liabilities and shareholders' equity 2,883,051 400,000 586,464 2,554,945 50,000 539,170 ,821,218 1 721,650 31,171 75,000 827,821 313,876 52,556 75,000 441,432 609,900 1,437,721 684,900 1,126,332 400,000 717,224 2,554,945 200,000 494,886 ,821,218 1