Abu's Magic Carpets Limited Balance Sheet August 31, 2020 Question 3 (44 points) The following are the comparative income statement and halance sheet for Abu's Magic Carpets Limited Abu's Magic Carpets Limited Income Statement Year Ended August 31, 2020 ASSETS Cash Accounts receivable Prepaid insurance Inventry Furniture and Equipment 2020 2019 $44,000 56,900 800 $22,000 48,000 600 75,000 176,700 40.000 110,600 2020 2019 Accumulated depreciation furniture and equipment Sales Cost of goods sold S 850,000 345,000 505,000 $775,000 340,000 435,000 Building 25,000 25,000 (8,000) (4,000) 120,000 120,000 Accumulated depreciation - building Land (16,000) (14.000) 27,000 27,000 Selling & Admin Depreciation expense Advertising Office expenses Utilities expec Salary expense 6,000 6,000 $324,700 $264,600 37,000 40,000 32.500 26,000 LIABILITIES AND SHAREHOLDERS' EQUITY 7,200 6,800 275,000 296,000 Liabilities Insurance expense 3,600 3.200 Accounts payable 351,300 378,000 Salary payable Income tax payable 153,700 $7,000 Interest expense 3,900 4,100 Income before income taxes 149,800 Income tax cxpense 25,000 52.900 11,000 $124.800 SAL900 Bank loan (long term) Total Liabilities Shareholders' Equity Common shares Retained earnings Total shareholder equity TOTAL LIABILITIES & SHAREHOLDERS $75,000 84,000 8,000 4,800 25.000 15,000 108,000 103,800 65.000 100,000 173,000 203,800 10,000 10,000 141,700 30,800 151,700 60,800 CT B EQUITY MacBook All $324.700 $264.000 Required: A. Calculate 12 ratios and discuss 5 to help you analyze Abu's Magic Carpe Limited. Some limited industry averages are provided to assist you. The following information is available for: Industry averages- 2020 Gross profit margin ratio 60.0% Returi on sales (net profit margin) 9% Return on total assets ratio Times interest earned Debt ratio .45 30 45 A/R collection period 30 days #of days sales in inventory 60 days Current ratio 1.5 Quick Ratio 75