Part II (30 marks) The following information has been extracted from the accounts of Star Hotel Ltd. Income Statement for the year ended 31 December 2019 ($'000) Sales (on credit) 950 Less: Cost of sales 390 Gross profit 560 Less: Expenses Interest expenses 40 Other operating expenses 485 525 Profit before tax 35 Income tax (5) Profit for the year 30 Statements of Financial Position as at 31 December 2019 ($'000) Assets Non-current assets (net) 550 2018 ($'000) 545 Current assets Inventories Accounts receivable Cash and bank 30 120 85 235 785 35 100 65 200 745 Total Assets Liabilities Non-current liabilities Long-term loan 380 360 Current liabilities Accounts payable Other accrued expenses 150 75 225 100 60 160 Total Liabilities 605 520 Shareholders' Equity Share capital Retained earnings 80 100 180 80 145 225 Total Liabilities and Shareholders' Equity 785 745 The following accounting ratios are given: Gross profit margin Net profit (after tax) margin Return (after tax) on equity Quick ratio Average collection period Average payment period Debt-to-equity ratio Interest cover 2019 58.95% (i) (ii) (iii) (iv) 140.00 days 2018 60.40% 4.16% 18.67% 1:03:1 36.14 days 90.12 days 2:31:1 2.37 times (vi) You are required to answer all of the following questions: (a) Calculate the missing accounting ratios (i) -(vi) for 2019. (9 marks) (Note: All workings must be shown and your answers should be rounded to 2 decimal places.) (b) Based on the accounting ratios given and calculated above, comment on the following aspects of Star Hotel Ltd. in 2019 as compared to 2018: Profitability (7 marks) Short-term liquidity (9 marks) Long-term solvency (5 marks) ~ End of Paper ~