Problem $4$:

A summarized statement of financial position and extracts of the statement of financial performance of Madrid Ltd$.$ for the year ended December $31,2022,$ is given below:

Statement of financial position

On December $31.2022$

$\backslash$table$[[$Particulars$,\backslash$table$[[$Amount $($$$)],[$December $31,2022]],\backslash$table$[[$Amount $($$$)],[$December $31,2021]]],[$Assets$,,],[$Building$,347,500,367,000],[$Accumulated Depreciation $-$ Building,$(20,000),(23,000)],[$Equipment$,125,000,94,000],[$Accumulated Depreciation $-$ Equipment,$(37,500),(45,200)],[$Investments$,22,200,16,500]]$

Page $6$ of $8\backslash$table$[[$Inventories$,65,400,57,950],[$Prepaid expenses,$25,650,23,900,],[$Accounts receivables,$44,000,37,300],[$Cash$,23,200,30,000],[$Total Assets,$615,450\_,558,450\_\_],[$Equity and liabilities$],[$Share capital $($ $$10$ per$),140,000,72,000],[$Retained earnings,$202,700,191,000],[$Long term borrowings,$110,000,140,000],[$Accounts payables,$55,250,45,250],[$Short$-$term notes,$18,100,12,100],[\backslash$table$[[$Interest payable$]],25,000,30,100],[$Income tax payable,$64,400,68,000],[$Total Equity and liabilities,$615,450\_,558,450\_\_]]$

Statement of Comprehensive Income $($Extracts$)$

$\backslash$table$[[$Particulars$,$Amount $($$$)],[$Sales revenue $(90\%$ on credit$),116,300],[$Cost of sales,$(35,200)],[$Operating expenses,$(27,300)],[$Interest expense,$(7,000)],[$Income Tax,$(5,800)]]$

Additional Information:

The results of ratios of competitor and Industry averages are $-$

$\backslash$table$[[$Ratio$,$Competitor,Industry$],[$Current ratio,$2\mathrm{.}57$:$1,1\mathrm{.}92$:$1],[$Accounts Receivable turnover,$8$ times,$5$ times$],[$Return on shareholders' equity,$13\mathrm{.}28\%,17\mathrm{.}19\%],[$Asset turnover,$1\mathrm{.}2$ times,$1\mathrm{.}9$ times$],[$Debt to asset ratio,$0\mathrm{.}72,0\mathrm{.}32]]$

Page $7$ of $8$ Requirements:

Calculate the following ratios for Madrid Ltd$.$ and comment on each ratio.

i$)$ Current Ratio

ii$)$ Accounts Receivable turnover

iii$)$ Return on shareholders' equity

iv$)$ Asset turnover

v$)$ Debt to total assets Ratio.