The income statement for the Clark Company for the two years ending 30 June 2014 and 30 June 2015 are as follows:

 Siphon Company
 

Income statement for the years ended 30 June 2014 and 2015

 

Items	2014  $	2015 $
Sales Cost of sales Gross Profit Interest expense Other operating expenses Net Profit	450,000 247,500 202,500 7,800 113,700 81,000	520,000 296,400 223,600 11,200 111,000 101400
Loan amount	$120000	$160,000

 The following amounts were extracted from Clark Company's balance sheet at 30 June 2014 and 30 June 2015.

Items	2014  $	2015  $
Accounts receivable Prepaid expenses Cash Inventory Bank overdraft Accounts payable Accrued Expenses	54,000 6,500 8,500 37,500 8,500 42,000 3,500	49,400 5,100 7,800 52,000 0 45,200 4,300

A.     Calculate the following ratios for the years ended 30 June 2014 and 30 June 2015 for Siphon Company, which makes all sales on credit. The balances in the accounts receivable and inventory accounts at 30 June 2013 were $50,000, and $40,500 respectively.
 

      i.         gross profit margin

 

     ii.         net profit margin

 

   iii.         current ratio

 

   iv.         quick ratio

 

     v.         accounts receivable turnover (times and in days) and

 

   vi.         inventory turnover (times and in days).

 

  vii.         the operating cycle in days

 

B.  Comment on the profitability of the business using the ratios calculated in part A of the question.