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The following financial statements are for Arumugam Trading Income Statement for the year ended 30 June 2019 $ 96,000.00 Sales (all credit) less: Cost of Goods Sold Inventories 01/07/2018 Purchases $ U Cost of Goods Available for Sale less: Inventories 30/06/2019 10,900.00 66,360.00 77,260.00 13,900.00 $ $ Gross Profit Other Income $ 63,360.00 $ 32,640.00 $ 1,000.00 $ 33,640.00 $ 22,120.00 Operating Expenses Net Profit $ 11,520.00 Balance Sheet as at 30 June 2019 Current Assets: Accounts Receivable S. less. Allowance for Doubtful Debts Inventories S 15,600 600 un S 15,000 13,900 100 $ S 200 in 29,200 Inventories Prepaid Expenses Accrued Revenue Non-Current Assets: Land Buildings (net) Plant & Equipment (net) Motor Vehicles (net) Total Assets Current Liabilities Bank-Overdraft Accounts Payable Accrued Expenses Non-Current Liabilities Mortgage 4 year Loan (due 31 March 2024) Total Liabilities un ini 20,000 10,800 16,000 4,000 S 50,800 80,000 ve 5,000 10,500 i en 300 16,000 S 16,000 S 16,000 32,000 48,000 S Net Assets Owner's Equity: Capital= A. Bowman 1 July 2018 Add: Net Profit for the year 44,480 S 11,520 56,000 8,000 Less: Drawings 5 S 48,000 Extra Information 30/06/2018 Industry Averages Gross Profit Rate 40.0% 35.0% Net Profit Rate 13.5% 15.0% Current Ratio 1.6 1 2.0 : 1 Quick Ratio 1.31 - 1.2 : 1 Inventory Turnover Rate 5.8 times 5 times Average Collection Period 50 days 45 days S 48,000 G Required: (a) Calculate for the year ended 30 June 2019: Gross Profit Rate. 0 Net Profit Rate. 3. Current Ratio 4 5 Quick Ratio. Inventory Turnover Rate. Accounts Receivable Collection Period. LA (b) Based on the ratios you have calculated, and the other information given, comment briefly on each of the following for Arumugam's business: A) Profitability B) Business Activity. c) Liquidity. (C) Advise Arumugam of possible reasons for any unsatisfactory situations that exist in relation to the business and suggest actions that may be taken to improve them. (Please add extra pages to answer the questions below)

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