Question 1: Recent financial statements for Law Company follow: LAW Company Balance Sheet June 30 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses 22,0001 200.000 310,000 12,000 Total current assets Plant and equipment, net 544,000 910.000 1,454,000 Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 8% S 280.000 390.000 670,000 Total liabilities Stockholders' equity Common stock, S10 par value Retained earnings S 190.000 594.000 784.000 Total stockholders' equity Total liabilities and stockholders' equity 1,454,000 LAW Company Income Statement For the Year Ended June 30 Sales S 2,730,000 Cost of goods sold 1,189,000 Gross margin Selling and administrative expenses 1,541,000 560,000 Net operating income Interest expense 981,000 31,200 Net income before taxes 949,800 Income taxes 284,940 Net income 664,860 Account balances at the beginning of the company's fiscal year were: accounts receivable, $190,000, and inventory, S270,000. All sales were on account Required: Compute financial ratios as follows: 1. Gross margin percentage, 2. Current ratio 3. Acid-test ratio 4. Average collection period. 5. Days' Supply in Inventory 6. Debt-to-equity ratio