q6: the financial statement of Indigo Limited are as follows...

QUESTION 6 (20 marks) 2018 The financial statements of Indigo Limited are as follows. Indigo Limited Statement of Financial Position As at December 31, 2019 and 2018 2019 Assets Current assets Cash $22,500 Accounts receivable 100,000 Inventory 57,500 Prepaid insurance 15.000 Total current assets 195,000 Property, plant and equipment, net 600.000 Total assets 5795,000 $15,000 127,500 22,500 22.500 187.500 472.500 S660.000 Liabilities Current liabilities Accounts payable Salaries payable Total current liabilities Noncurrent liabilities Total liabilities S60,000 37.500 597,500 112.500 210,000 $75,000 60,000 S13:00 225.000 360,000 $225,000 75.000 300,000 5660.000 Shareholders' Equity Ordinary shares. $100 par 435,000 Retained earnings 150.000 Total shareholders' equity 585.000 Total liabilities and equity 5795.000 Indigo Limited Income Statement For the year ended December 31, 2019 2019 Sales (all on credit) $600,000 Less: Cost of goods sold 315.000 Gross profit 285.000 Less: Operating expenses 82.500 Operating profit 202.500 Less: Income tax expense 40.500 Profit for the year $ 162.000 QUESTION 6 (continued) (14 marks) Required: (Show all calculations and round ALL answers to 2 decimal places.) a. Calculate the following ratios for Indigo Limited for the year 2019: i) Current ratio ii) Quick ratio iii) Return on assets iv) Return on equity v) Inventory tumover rate vi) Earnings per share b. Based on the ratios calculated in (a), explain to a shareholder why the current ratio and the quick ratio are different. Do you observe any liquidity problems of Indigo Limited? Explain (6 marks)