I-Heart-Accounting Company Balance Sheet As at December 31 Assets Cash Short-term investments Accounts receivable Merchandise inventory Other current assets Total current assets Long-term investments Property, plant and equipment Total assets Liabilities and Shareholders' Equity 2021 2020 $28,404 $886,097 $0 $716,799 $4,195,613 $2,383,337 $1,810,747 $716,520 $503,428 $389,685 $6,538,191 $5,092,439 $550,770 $1,264,728 $3,439,215 $2,158,047 $10,528,177 $8.515.214 Accounts payable Accrued liabilities Income taxes payable Salaries payable Total current liabilities $646,401 $470,756 $2,270,229 $1,300,532 $100,433 $379,533 $86,359 $70,298 $3,103,422 $2,221,119 Long-term debt Total liabilities Shareholders' Equity Commons shares Retained earnings Total Shareholders' equity $578,467 $117,488 $3,681,889 $2,338,606 $2,327,420 $2,327,420 $4,518,868 $3,849,188 $6,846,288 $6,176,607 Total liabilities and shareholders' equity $10.528,177 $8.515,214 I-Heart-Accounting Company Income Statement For the year ended December 31 2020 2021 Revenue* $9,700,885 $11,618,445 Cost of goods sold $5,429,351 $6,266,282 Gross profit $4,271,534 $5,352,163 Operating expenses General and administrative expenses $1,013,083 $718,937 Selling and marketing expenses $2,002,768 $1,570,482 Depreciation expense $325,875 $204,543 Total operating expenses $3,341,726 $2,493,962 Income from operations $929,809 $2,858,201 Other income and expenses Interest income $30,072 $82,180 Interest expense -$72,887 -$14,803 Income before income tax expense $886,994 $2,925,578 Income tax expense $217,313 $716,767 Net income $669,680 $2,208,811 * credit sales are 80% of sales Part 1 Calculate the following ratios for the company for 2021 and 2020. For any ratios that require an average, use the closing balance for the year. 2021 2020 Ind. Av. Liquidity Current Ratio Working Capital Profitability Gross Profit Margin Net Profit Margin Return On Equity Return On Assets Asset Turnover Operations Management Inventory Turnover Ratio Accounts Receivable Turnover Ratio Solvency Debt-to-Equity Ratio Times Interest Earned Debt-to-Total-Assets Ratio 1.85 not available 32% 8.50% 38.25% 17.46% 2.05 8.27 11.25 not available 9.33 0.54 Part 2 Consider the figures caculated in the ratio analysis above. How is the company performing from a liquidity, profitability, operations management and solvency perspective? Liquidity Current ratio Working capital Profitability Gross Profit Margin Operating Profit Margin Net Profit Margin Return On Equity Return On Assets Asset Turnover Operations management Inventory turnover ratio Accounts receivable turnover ratio Solvency Debt-to-equity ratio Times interest earned Debt-to-total-assets ratio Part 3 Based on the figures you calculated, has the company shown improvement in 2021 over 2020? Would you invest in I-Heart-Accounting Company