7 / 11 om A) Calculate and interpret the financial ratios for 2019 corresponding to the industry norms provided as follows: INDUSTRY NORMS Current ratio 1.5: 1 Inventory turnover 3x Total asset turnover 1x Operating profit margin 18% Operating income return on investment 18% Debt ratio 60% Average collection period 100 days Fixed asset turnover 1.5:1 Return on equity 15% B) The company is applying for Bank Loan. Write a report to Gulf Bank PLC whether you recommend the bank for sanction of Loan. (4 marks, 250 words) C) Would you recommend investme in this company? Similar companies pay 12% return. Calculate any other ratio you think appropriate. Write a report. (4 marks 250 words) DC 6 / 11 Snort-term notes payable SOU Current liabilities $2,000 Long-term debt 2,000 4,000 Owners' equity Total liabilities and owners' equity $8,000 Income Statement (5000) Net sales (all credit) $8,000 (3.300) Cost of goods sold Gross profit 4,700 (3.000) 1,700 Operating expenses (includes $500 depreciation) Operating income Interest expense Earnings before taxes Income taxes (40%) (367) $1,333 (533) $ 800 Net income Al Tareeqah Management Studies - 2020 C DC 6 / 11 QUESTION 3 (20 marks) A) The balance sheet and income statement for the J. P. Robard Mfg. Company are as follows: (12 marks) Balance Sheet (5000) Cash $ 500 Accounts receivable 2,000 Inventories 1,000 3,500 Current assets Net fixed assets 4.500 $8,000 Total assets $1,100 600 Accounts payable Accrued expenses Short-term notes payable Current liabilities 300 $2,000 2.000 Long-term debt Owners' equity Total liabilities and owners' equity 4.000 $8.000 Income Statement (5000) $8.000 (3.300) Net sales (all credit) Cost of goods sold Gross profit 4.700 75%