QUESTION 6 (20 marks) 2018 The financial statements of Indigo Limited are as follows. Indigo Limited Statement of Financial Position As at December 31, 2019 and 2018 2019 Assets Current assets Cash $22,500 Accounts receivable 100,000 Inventory 57,500 Prepaid insurance 15,000 Total current assets 195,000 Property, plant and equipment, net 600,000 Total assets $795,000 $15,000 127,500 22,500 22.500 187,500 472,500 $660,000 Liabilities Current liabilities Accounts payable Salaries payable Total current liabilities Noncurrent liabilities Total liabilities $60,000 37,500 $97,500 112.500 210,000 $75,000 60,000 $135,000 225,000 360,000 Shareholders' Equity Ordinary shares, $100 par Retained earnings Total shareholders' equity Total liabilities and equity $435,000 150,000 585,000 $795,000 $225,000 75,000 300,000 $660,000 Indigo Limited Income Statement For the year ended December 31, 2019 2019 Sales (all on credit) Less: Cost of goods sold Gross profit Less: Operating expenses Operating profit Less: Income tax expense Profit for the year $600,000 315,000 285,000 82,500 202,500 40,500 $ 162,000 QUESTION 6 (continued) Required: (Show all calculations and round ALL answers to 2 decimal places.) a. Calculate the following ratios for Indigo Limited for the year 2019: (14 marks) i) Current ratio ii) Quick ratio iii) Return on assets iv) Return on equity v) Inventory turnover rate vi) Earnings per share b. Based on the ratios calculated in (a), explain to a shareholder why the current ratio and the quick ratio are different. Do you observe any liquidity problems of Indigo Limited? Explain. (6 marks)