Summary information from the 2021 statement of profit or loss of Coconut Plantations Pty Ltd is provided below.

The operating expenses include $18000 of interest expense.
The following amounts have been extracted from the company’s statement of financial positions.

Required
(a) Calculate and interpret the:
(i) Days inventory turnover
(ii) Days debtors
(iii) Current ratio
(iv) Quick ratio
(v) Gross profit margin
(vi) Profit (after tax) margin.
(b) If you are contemplating providing a short-term loan to Coconut Plantations Pty Ltd, discuss what these ratios reveal about the associated risk.

Transcribed Image Text:

Sales revenue Cost of sales Gross profit Other income Operating expenses Profit (before tax) Income tax Profit (after tax) $1675 000 1 025 000 650 000 1500 315 000 336 500 100 950 $ 235 550