Question 4) Youve been given the following information for Colleens Cows, a local butcher in Kamloops. Colleen's cows Balance Sheet 31-Oct Assets Current Cash 10,000 A/R 95,000 Inventory 1,358,964 Notes receivable 50,000 PP&E 25,000 Intangible Assets 500 Total Assets 1,539,464 Liabilities Current A/P 650,000 Salary payable 35,000 Mortgage - Shareholder Equity Common shares 500 Retained Earnings 853,964 Total Liabilities & Shareholder equity 1,539,464 See next page 9 | P a g e E X A M # 1 2 1 7 - 7 A C C T 2 2 5 0 Colleen's cows Income Statement 31-Oct Revenue 65,000,000 Cost of Goods Sold ? Gross Profit 2,000,000 Operating Expenses Rent Expense 675,000 Salary Expense 125,000 Insurance Expense 650,000 amortization Expense 10,000 Office Expense 70,000 Income before tax ? Tax 95,000 Net Income ? Industry Averages Working Capital 500,000 Current Ratio 1.5 Inventory Turnover 40 Days in Inventory 10 Debt to Total Assets 0.5 Gross Profit Margin 3% Profit margin 0.04% Using the industry averages above, prepare the following: Required: 1. Take any 4 of the ratios above and briefly describe how they are calculated and what the number means 2. Using the Balance Sheet and Income Statement provided, compare 4 of the company actual ratios to the industry average ratios and determine if the company is doing better or worse than the industry average. 3. Can you make any recommendations from a management accounting standpoint on how the company could do better?