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Garner Men's Wear is a relatively small, independent men's wear retailer located in Oshawa, Ontario, that has been operating for more than 30 years. The owner, Adam Garner, previously worked for 10 years at Tip Top Tailor, a national chain of men's formal clothing, before starting his own store. Although the first few years were difficult as the business was getting established, Adam was eventually able to develop the business and provide superior ser- vice while offering high-quality men's clothing at competitive prices. His target market is made up of middle-aged executives and professionals, most of whom he knows on a first-name basis. Adam has always felt that if he takes care of his best customers, the financial part of the business will take care of itself. He is comfortable with this phi- losophy because he really does not enjoy all the bookwork that is part of running a business. Recently, however, he has become concerned about the performance of the business. One of his concerns includes the financial aspects of the business. He seems to always have lots of customers, but when he gets his financial statements from his accountant about two months after the year-end, he is surprised and disappointed to find that the net income of the business has dropped to $10,000 and there is no cash in the business bank account. Assume that you have been called in to evaluate Adam's business. He provides you with the following financial statements for the last two years: Sales Cost of Goods Sold Gross Profit Expenses Net Profit Garner Men's Wear Ltd. Income Statement 2019 $750,000 2020 $720,000 500,000 490,000 250,000 230,000 200,000 220,000 $ 50,000 $ 10,000 Questions 1. Comment on the financial management practices of Adam Garner in managing Garner Men's Wear. 2. Calculate and discuss the significance of each of the following for Garner Men's Wear: a. Current ratio b. Inventory turnover c. Debt ratio d. Return on investment e. Return on sales 3. How many days are there in this company's business cycle? (That is, how long is it taking to convert cash spent back to cash available?) 4. Where did the $10,000 cash from the 2019 statement go in 2020, even though the business made $10,000 income during 2020?