M&K Design Limited Balance Sheet October 31, 2019 Assets Cash Accounts receivable Inventory $22,000 122,000 96,000 240,000 Furniture and Equipment 700,000 Accumulated depreciation - furniture and equipment (300,000) Long term investment 125,500 525,500 $765,500 Liabilities & Shareholder's Equity Liabilities Accounts payable Salary payable Income tax payable $158,000 12,000 30,000 200,000 75,000 275,000 Bank loan (long-term) Shareholder's Equity Common shares h Retained earnings 50,000 440,500 490.500 $765,500 Selected data from October 31, 2018 financial statements: Total assets $683.500 Accounts receivable $107.500 Inventory $ 60,000 Accounts payable $175.000 Required: A. Calculate 10 ratios (see page 7) to help you analyze M&K Design Limited. Some limited industry averages & comparative ratios are provided on the next page. B. Using at least 4 ratios calculated above to answer the following: M&K Design has come to you looking for a loan of $40,000 to be repaid over 5 years. Would you be willing to loan them the money? Provide an explanation for your answer. The following information is available for: I Gross profit margirtratio Return on sales (net profit margin) Rate of return on assets Debt ratio Current ratio Asset turnover Industry averages 2019 50.0% 99 .25 .40 1.5 2.1 .75 M&K Design 2018 47.2% 9.5% .24 .48 1.0 2.0 .67 Quick Ratio