AE8.12 The following details concern the business of N. Shakey, who is worried about the profitability and financial structure of his business at 30 June 2017, especially since the bank is requiring repayment of his overdraft. 30 June 2016 30 June 2017 $ $ Sales (credit) 60,000 90,000 Cost of sales 39,000 63,000 All other expenses 12,000 21,000 Cash at bank 12,000 (18,000) Inventory 18,000 33,000 Accounts receivable (net) 12,000 30,000 Non-current assets (net) 24,000 48,000 Accounts payable 6,000 9,000 N. Shakey, capital 60,000 72,000 (The balance as at 1 July 2015 was $56,000) Non-current liabilities 12,000 Inventory at 1 July 2015 was $15,000 Accounts receivable at 1 July 2015 were $10,000 (a) Calculate the following ratios for 2016 and 2017: i. operating profit margin Operating Profit = Profit before interest and tax Profit=Sales - COGS - other Expense =60000-39000-12000=9000 =90000-63000-21000=6000 rate of return on owners' equity current ratio Current Assets= Cash + accounts receivable+ inventory Current liabilities= Bank overdraft iv. acid test ratio V. gearing vi. inventory turnover period