Hi View Ltd's income statement for the years ended 31 December 2013 and 2014 and the balance sheet as at 31 December 2013 and 2014 are as follows: HI VIEW LTD Income statements for years ended 31 December 2014 2014 Sales Cost of sales Gross profit Other expenses (including depreciation) Other operating income Sm 153 (76) 77 (48) 29 Interest revenue and similar income 29 Interest expense and similar charges Tax on profit or loss on ordinary activities Profit on ordinary activities after taxation Retained profit brought forward from last year 25 (6) 19 56 75 (18) Proposed dividend on ordinary shares Retained profit carried forward 57 HI VIEW LTD Balance sheet as at 31 December 2013 and 2014 2013 Sm 2014 Sm Current assets Inventory Debtors Cash at bank and in hand 24 26 27 77 25 25 1 51 Non-current assets Land and buildings Plant and machinery 110 62 172 249 130 56 186 237 Total assets Current liabilities Trade creditors Income tax payable Dividend payable 23 16 14 53 20 6 14 40 40 40 Non-current liabilities Debenture loans (10%) Shareholders' equity Paid-up share capital issued at $1) Retained profits 100 56 100 57 157 237 156 Total liabilities and shareholders' equity 249 Other important information are as follows: . The purchases of inventory made in year 2014 are $77 million. All purchases made are in credit term. . All sales are in credit term. UPLOAD YOUR ANSWERS a. Calculate the following financial ratios for year 2014. (0.8 pts) 1. Gross profit margin Gross profit margin = Gross profit x 100 Sales x 100 ii. Net profit margin Net profit margin= Net profit before interest and taxation Sales ii. Average inventory turnover period Average inventory tumover periods = Average inventory held Cost of sales iv. Earnings per share x 365 iv. Earnings per share Eamings per share = Earnings available to ordinary shareholders Number of ordinary shares on issue b. Interpret the financial health of the company using the financial ratios calculated in a. The company's gross profit margin, net profit margin and average inventory turnover period in the previous year are 51%, 30% and 86 days respectively. The industry average of earnings per share in year 2014 is $0.50. (0.9 pts)