Question 2 (Ratio Analysis/ 25 marks) Selected year-end financial statements of Healthy Life Limited are as follows: 2018 Healthy Life Limited Comparative Statements of Financial Position As at December 31, 2019 and 2018 2019 Assets Cash $ 120,000 Short-term investment 100,800 Accounts receivable (net) 350,400 Notes receivable (due in 3 months) 54.000 Inventory 385,800 Prepaid rent 31.800 Property, plant and equipment (net) 1,839,600 Total Assets S2.882.400 $108,000 54,000 78,000 30,000 586,800 24,000 1,686,000 S2.566.800 Liabilities and Equity Accounts payable Wages payable Income taxes payable Long-term loans (due in 5 years) Share capital Retained earnings Total Liabilities and Equity $ 210,000 38,400 39,600 760,800 1,080,000 753.600 S2.882.400 $345,024 78,000 30,000 760,800 1,080,000 272.976 $2.566.800 Healthy Life Limited Income Statement For the year ended December 31, 2019 Net sales (all on credit) Cost of goods sold Gross profit Selling expenses Administrative expenses Finance costs - interest expenses Income before income taxes Income taxes ( 40%) Net income $5,383,200 (3,400,070) (?,???,???) (120,000) (962,200) (49.900) (???,???) (??? ???) S ??.??? (b) Calculate the following ratios for Healthy Life Limited for 2019: i) Accounts receivable collection period (2 marks each) ii) Inventory holding period iii) Gross profit margin iv) Profit margin v) Retum on equity (Please provide formulae and all ratios should be expressed in one decimal place.) (10 marks) (c) Discuss the implications of gross profit margin and profit margin, and the relationship between these two margins