Question 1:Rare Metals Inc. sells a rare metal found only in underdeveloped countries overseas. As a result of munstable governments in these countries and the rarity of the metal, the price fluctuates significantly. Financial information is given assuming the use of the first in, first-out (FIFO) method of inventory valuation and also the last-in, first-out (LIFO) method of inventory valuation. Current assets other than inventory total $1,230 and current liabilities total $1,600. The ending inventory balances are $1,350 for FIFO and $525 for LIFO. Rare Metals Inc. Income Statements in Thousands) FIFO LIFO Net sales $3,000 $3,000 Cost of goods sold 1,400 2,225 Gross profit 1,600 775 Selling, general, and administrative 600 Operating profit 1,000 175 Interest expense 80 Earnings before taxes 920 95 Provision for income taxes 322 33 Net earings $598 $62 Required (a) Calculate the following ratios assuming RareMetals Inc uses the FIFO method of inventory valuation gross profit margin, operating profit margin, net profit margin, current ratio, tax rate, and quick ratio. (b) Calculate the ratios listed in (a) assuming RareMetals Inc. uses the LIFO method of inventory valuation (c) Evaluate and explain the differences in the ratios calculated in (a) and (b). 600 80