Howards Plant Nursery has total yearly sales of $450 000. Total operating expenses were $120 000. At the start of the year there was $80 000 worth of stock, and at the end of the financial year, there was $95 000 worth of stock. During the year, $230 000 worth of stock was purchased. In the previous year the net profit was $180 000, even though sales were only $400 000.

(a) (i) Calculate the gross profit. 1 mark

(ii) Calculate the net profit. 1 mark

(b) Explain how net profit can fall, even though sales have increased. 4 marks

(c) Discuss how the use of financial ratio analysis could help Howard better manage the finances of the business. 4 marks