The financial statements of Ethan &Suw, a company limited by liability, for the years ended 31 May 2005 and 31 May 2006 are summarised below. Income statements for the years ended: 31 May 2005 31 May 2006 K Millions K Millions K Millions K Millions Revenue 20,000 26,000 Cost of sales (15,400) (21,050) Gross profit 4,600 4,950 Expenses: Administrative (800) (900) Selling and distribution (1,550) (1,565) Depreciation (110) (200) Loan note interest (105) (2,460) (2,770) Net profit 2,140 2,180 Balance sheets as at: 31 May 2005 31 May 2006 K Millions K Millions K Millions K Millions Non current assets At cost 4,600 5,600 Accumulated depreciation (800) (1,000) 3,800 4,600 Current assets Inventory 6,000 6,700 Receivables 4,400 6,740 Bank 120 960 10,520 14,400 14,320 19,000 Capital and reserves Issued share capital 8,000 8,000 Accumulated profit 3,120 5,300 11,120 13,300 Non-current liabilities 7% Loan notes 1,500 Current liabilities 3,200 4,200 14,320 19,000 Additional Information During 2006, Ethan &Suw issued loan notes of K1, 500,000 at 7% per annum to fund the expansion of the business. The additional cash was received on 1 June 2005. Required: (a) Calculate the following ratios for Ethan &Suw for both years. Gross profit percentage Net profit percentage Return on equity Inventory turnover Quick ratio Receivables collection period State the formulas used for calculating the ratios. (b) Comment on the success of the business expansion as indicated by the ratios you have calculated in part (a).