The financial accountant of High-Tex Limited has prepared the financial statements for the financial year 2019. Use the financial information provided to: 1. Calculate the profitability and efficiency ratios for 2019 and 2018. 2. Compare the financial ratios between 2018 and 2019. Explain the changes in each profitability and efficiency ratio (the meaning of the changes and the reason for the changes). 3. Provide a conclusion on the overall profitability and efficiency of the company. Financial Ratios Return on assets (ROA) Return on equity (ROE) Profit margin Gross profit margin Inventory turnover Debtors turnover Formula Profit / Total assets x 100% = Profit / Average owner's equity x 100% = Profit/ Sales x 100% = (Sales - cost of sales) / sales x 100% = cost of Sales / Average inventory = Sales / Average accounts receivable High-Tex Limited Income Statement for the year ending 30 June 2019 ($'000) Revenue - computer 9,600 Revenue - software 1,600 Total operating revenue 11,200 Cost of sales 5,720 Gross profit 5,480 Administration expense 1,250 Wages expense 650 Depreciation expense 225 Other expenses 480 Earnings before interest and tax 2,875 Interest expense 455 Profit before tax 2,420 Income tax expense 726 Profit for the period from continuing operations 1,694 2018 ($'000) 8,250 1,700 9,950 5,205 4,745 950 510 225 435 2,625 525 2,100 630 1,470 2,018 ($'000) 2155 1,045 980 4,180 7,150 451 7,601 11,781 High-Tex Limited Balance Sheet as at 30 June 2,019 ($'000) Current assets Cash 1,450 Accounts receivable 1455 Inventories 755 Total current assets 3,660 Non-current assets Property, plant and equipment 6,780 Intangible assets 550 Total non-current assets 7,330 Total assets 10,990 Current liabilities Accounts payable 735 Income tax payable 650 Accrued expenses 815 Total current liabilities 2,200 Non-current liabilities Bank loans 3,700 Provisions 585 Total non-current liabilities 4,285 Total liabilities 6,485 Net assets 4,505 Equity Share capital 2,000 Retained earnings 2,505 Total Equity 4,505 1145 685 995 2,825 4,100 415 4,515 7,340 4,441 2,000 2,441 4,441 Additional information: The total equity as at 30 June 2017 is $4,185,000. The inventory as at 30 June 2017 is $915,000. The accounts receivable as at 30 June 2017 is $1,055,000. Calculate the following profitability ratios (Keep 2 decimal places in terms of %, 4 Marks): Financial Ratios 2019 2018 Increase/Decrease Return on assets (ROA) Return on equity (ROE) Profit margin Gross profit margin Discuss the changes in ROA (0.5 mark): Discuss the changes in ROE (0.5 mark): Discuss the changes in profit margin (0.5 mark): Discuss the changes in gross profit margin (0.5 mark)