MNO Limited

Income Statement (in $ thousands)

Item	Amount
Sales Revenue	7,000
Cost of Goods Sold	4,000
Gross Profit	3,000
Operating Expenses	2,000
Operating Profit	1,000
Interest Expenses	130
Income Tax Expense	90
Net Income	780

Balance Sheet (in $ thousands)

Assets

• Current Assets
  • Cash: 70
  • Accounts Receivable: 400
  • Inventory: 700
  • Total Current Assets: 1,170
• Long-Term Assets
  • Property, Plant & Equipment (net): 1,200
  • Other Assets: 1,000
  • Total Long-Term Assets: 2,200
• Total Assets: 3,370

Liabilities and Equity

• Current Liabilities
  • Trade Creditors: 400
  • Short-Term Bank Loans: 300
  • Total Current Liabilities: 700
• Long-Term Liabilities
  • Long-Term Debt: 1,200
  • Other Liabilities: 200
  • Total Long-Term Liabilities: 1,400
• Total Liabilities: 2,100
• Equity
  • Common Shares: 500
  • Retained Earnings: 770
  • Total Equity: 1,270
• Total Liabilities and Equity: 3,370

Required:

1. Compute the operating profit margin and net profit margin for MNO Limited.
2. Calculate the debt-to-equity ratio and interpret the company's leverage.
3. Analyze the company's liquidity using the current ratio and quick ratio.
4. MNO Limited plans to expand its operations by investing $500,000 in new equipment. Suggest a financing strategy for this investment.
5. Recommend ways to improve the company’s profitability and return on equity.