Financial analysis

XYZ company's calendar-year financial data are shown below together with Notes (1) to (3): Income Statement data Net sales Cost of goods sold Gross profit Operating expenses Operating income Interest expense Income before taxes Income taxes Net profit HK$ 650,000 422,500 227,500 140,500 87,000 9,100 77,900 23,400 54,500 Balance Sheet Items Ending Balances Cash HK$ 19,500 Accounts receivable (net) 65,000 Inventory 71,500 Property, plant and equipment (net) 195,000 Total assets 351,000 Current liabilities 74,100 Long-term notes payable 97,500 Share Capital: $5 par value 65,000 Retained earnings 114,400 Total liabilities and equity 351,000 (1) XYZ's total assets and total equity equal to HK$339,000 and HK$144,400 respectively for the prior year. (2) No additional shares were issued during the year. (3) December 31 market price per share is HK$49.50. (A) Calculate the following ratios for the company: (a) Profit margin ratio (b) Gross margin ratio (c) Return on total assets (d) Return on ordinary shareholders' equity (e) Basic earnings per share (f) Price earnings ratio (g) Working Capital (B) Your good friend is going to start a new business and she/he is asking for your advice with reasons on which 5 financial ratios are important and relevant to her/his business in general which, would need to be reviewed and analysis from time to time. You may make any assumption you feel applicable on this case