Larry is also curious about financial ratios. He would like you to explain the concept of each of the three main categories of ratios. He has provided a set of comparative financial statements and ratio calculations from the 2021 results (EXCEL APPENDIX B). From the 2022 financial statements, Larry would like you to calculate the 2022 ratios for each ratio listed from 2021. Larry wants to know how Lotus Coffee is doing compared to the previous year including any recommendations for improvement. He is particularly interested in a conclusion of how Lotus Coffee is doing under each category of ratio. As this is a huge undertaking, your brother suggests that you get a few of your friends from school to help you and to ignore all taxes for now. In appreciation, you and your friends will receive gift cards to your favourite coffee shops that serve Lotus Coffee beans. Time to call them up, convince them to help and get to work. After all, you do need coffee to study and complete all of the assignments in this college life. Case #2 Lotus Coffee - Appendix B Comparative Financial Statements and Industry Ratios Lotus Coffee Inc. Comparative Income Statement Year Ended September 30 2021 1,275,000 422.220 852,780 2022 1.440,000 479,424 960,576 Coffee sales Cost of goods sold Gross profit Operating expenses Staff expense General operating expense Depreciation expense Income from operations Other income and expenses Interest expense Income before income taxes 255,000 318,750 44,000 235,0301 288,000 360,000 44,000 268,576 0 0 235,030] 268,576 Lotus Coffee Inc. Comparative Balance Sheet At September 30 2021 2022 Assets Current Assets Cash Accounts receivable Materials Inventory Total Current Assets 25,000 150,000 98.881.2 273,881.21 30,000 120,000 107,870.4 257,870.41 Proptery Plant and Equiptment Land Buildings (net of depreciation) Equipment (net of depreciation) Total Property, Plant and Equipment Total Assets 120,000 160,000 44,000 324,000 597,881.2 120,000 130,000 30,000 280,000 537,870.4 Liabilities and Shareholders' Equity Total Assets 597,881.2 537,870.4 Liabilities and Shareholders' Equity Current Liabilities Line of credit Accounts payable Current portion of long-term debt Total Current Liabilities 0 4,587 144,000 148,587 0 0 144,000 144,000 Non-Current Liabilities Loan payable Total Liabilities 300,000 448,5871 156,000 300,000 Shareholders' Equity Common shares Retained earnings Total Shareholders' Equity Total Liabilities and Shareholders' Equity 50,000 99,294 149,294 597,881 50,000 187,870 237,870 537,870 Financial Ratios Accounts receivable turnover Asset Turnover Current ratio Debt to total assets Gross profit margin Profit (Operating) margin Return on assets Working capital 2021 6.8 2.133 1.843 75.0% 66.9% 18.4% 39.3% 125,294.2