(Ratio analysis over time) The following information comes from the accounting records of Hercep Ltd. for the first three years of its existence: 2018 2019 2020 Statement of Financial Position Assets Cash Accounts receivable Inventory Capital assets (net) Other assets $23,100 66.800 108.000 434,000 239,000 $870,900 $19,100 50,000 135,000 452,000 215,000 $871,100 $26,300 147,500 240,000 492,000 268,400 $1,174,200 $58.000 Liabilities and equity Accounts payable Long-term debt Common shares Retained earnings $116,000 196,000 516,000 42.900 $870,900 246,000 516,000 51.100 $871,100 $116,000 492.000 516,000 50,200 $1,174,200 Statement of Earnings Sales Cost of goods sold Other expenses $675,000 (418,500) (168,000) 88,500 (26,550) $61,950 $840,000 (567,000) (221,000) 52,000 (15,600) $36,400 $950,000 (674,500) (219,000) 56,500 (16,950) $39,550 Income tax Net income Your answer is partially correct. Based on above information, analyze the changes in the company's profitability and liquidity, in addition to the management o accounts receivable and inventory from 2018 to 2020. (Round answers to 1 decimal place, e.g. 13.5% or 13.5.) 2018 2019 2020 Sales 100.0 % 100.0 % 100.0 % Cost of goods sold 58.0 % 68.0 % 70.0 % Gross margin 42.0 % 32.0 % 30.0 % Other expenses 25.2 % 29.8 % 22.9 % Income taxes 5.0 % 0.7 % 2.1 % Net income 11.7 % 1.5 % 5.0 % 2018 2019 Current Ratio 1.8 :1 3.9 :1 Quick Ratio 0.8 :1 1.4 :1 A/R Turnover 9.7 times 12.0 times Average Collection Period 37.6 days 30.3 days Inventory Turnover 3.3 times 3.9 times Days to Sell Inventory 110.4 days 92.8 days 2020 3.5 :1 1.5 :1 9.4 times 38.8 days 3.7 times 98.7 days Based on the above information, analyze the company's use of leverage from 2018 to 2020. (Round answers to 1 decimal place, e.g. 15.1%.) 2018 2019 2020 Debt to Equity 0.5 % 0.5 % 1.0 % Return on Assets 8.9 % 1.3 % 4.8 % Return on Equity 13.5 % 2.0 % 8.4 %