Question #1: (5+3=8 Marks) a. TMI Ltd. started its furniture business last year. Being a newcomer in the industry, the management wants to know the company's position in the industry. The most recent industry average ratios and the firm's financial statements are as follows: (3+2=5 Marks) Industry Average Ratios Current ratio 4.5 Quick Ratio 1.8 Debt-to-Equity ratio Total Assets Turnover 20% 1.5 Times interest earned 6 Net Profit margin 5.2% Inventory turnover Return on Total Assets 10.5 12% Financial Leverage Return on Equity 1.6 12.48% Amount ($) Items 98,000 Accounts Payable Amounts ($) 55,000 Items Cash Total Operating Expense Income Tax Net Fixed Assets Cost of Goods Sold Inventories 82,500 Interest Expense 18,000 Total Sales 147,000 Long-term Bank Loan 660,000 Common Stock Equity 139,000 Other Current Liabilities Notes Payable (Maturity 66,000 within 1 year) 49,500 Net Profit after tax 2,900 795,000 50,000 315,000 11,000 Accounts Receivables Total Operating Profit 29,000 27,000 (i) Calculate the following ratios for TMI : 1) Net Profit Margin, 2) Total Asset Turnover 3) Financial Leverage/Equity Multiplier. (i) Based on the DuPont analysis, Identify the area where TMI needs to improve its performance. b. What are the two primary activities of the financial manager that are related to the firm's balance sheet