#2) (6 Marks) Watrous Inc's financial statements are as follows: Watrous Inc Balance Sheet December 31, 2020 Current Assets Cash Short-Term Investments A/R (net of AFDA) Inventory Total Current Non-Current Assets PPE (net of accum dep'n) Total Assets $55,000 35,000 155,000 322,050 $567,050 1 425,000 $992,050 $155,000 222,000 Current Liabilities Accounts Payable Accrued Expenses Total Current Non-Current Liabilities Bond Payable Total Liabilities $377,000 400,000 $777,000 Equity Common Shares Retained Earnings Total Equity $50,000 165,050 215.050 Total Liabilities and Equity $992,050 Watrous Inc Income Statement For Year Ended December 31, 2020 Sales (all on credit) COGS Gross Profit Operating Expenses Operating Profit (EBIT) Interest Expense Earnings Before Taxes (EBT) Taxes Earnings After Tax (EAT) $1,780,000 1,420,000 $360,000 135,000 $225,000 50,000 $175,000 43,750 $131,250 Compute the following financial statement ratios: a) Profit Margin b) Return on Equity c) Accounts Receivable Turnover d) Current Ratio e) Times Interest Earned f) Debt to Total Assets