Yellowstone Wolves Pty Ltd began operations on 1 January 2020. Below is selected information from their comparative financial statements for the year ended 31 December 2021:

	2021	2020
Cash assets	$28,000	$30,000
Receivables	70,000	65,000
Inventories	56,000	58,000
Property, plant and equipment (net)	63,000	66,000
Accounts Payable	22,000	25,000
Short-term Loan	20,000	24,000
Non-Current Liabilities	63,000	60,000
Revenue	240,000	250,000
Less: Cost of Sales	130,000	140,000
Gross Profit	110,000	110,000
Other Expenses	43,000	48,000
Profit	67,000	62,000

Required:

a) Calculate the following ratios for the year ended 2021 (to 1 decimal place).

1. Profit margin ratio. (2marks)

2. Current ratio. (2marks)

3. Receivables turnover ratio. (2marks)

4. Inventory turnover ratio. (2marks)

5. The debt ratio. (2marks)

b) After calculating the current ratio for Yellowstone Wolves Pty Ltd, the owner decided that the company was in a sound position for paying its liquid liabilities. As their bookkeeper discuss the limitations of the owners conclusion. (4 marks)

Ratio	Workings
1.
2.
3.
4.
5.