You are presented with the following summarised accounts for Topcat Co, a limited liability company. Income statement for the year ended 31 May 2021 $000 Net sales 160 Cost of goods sold (100) Gross profit Operating expenses 60 (35) Operating income Interest expense 25 (5) Income before income taxes Income tax expense 88 (4) Net income 16 Topcat Statement of Financial Position as at 31 May 2021 $000 $000 Assets Current assets Inventory 45 Accounts Receivables 25 Cash and bank Total current assets 75 Property, plant and equipment 150 Total Assets 225 Equity and liabilities Equity in oh Current liabilities Accounts Payables Accrued Liabilities 30 15 45 50 95 Long-term Liabilities Bank loans Total liabilities Common stock 100 Retained earnings 30 Total Stockholders' equity Total Liabilities and Stockholders' equity 130 225 As at 31 May 2020: Total assets Accounts Receivables Inventory $'000 175 27 25 Credit period provided by Topcat on sales was 30 days. There was an issue of common shares amounting to $50,000 on 3 December 2020. The ratios for Topcat for previous years 2019 and 2020 as well as the ratio for the industry sector in which Topcat operates, in year 2021 are as follows: Ratio Historical Data Rate of return on total assets (%) Asset Turnover ratio Gross profit percentage (%) Profit margin ratio Current ratio Quick/Acid test ratio Days' sales in receivables Days' sales in inventories Debt to equity ratio Times-interest-earned ratio Topcat 2019 12.0 0.739 30.4 8.1 2.0 1.5 32 100 1.11 2.1 Topcat 2020 11.0 0.731 34.7 7.2 1.4 1.1 44 105 1.02 3.2 Industry Average 2021 11.3 0.836 32-3 7.7 1.5 1.2 35 103 1.21 1.5 Required: (a) State clearly the formulae used for each of these 10 ratios, and calculate these ratios for Topcat for the year ended 31 May 2021. (i) Rate of return on total assets (1 mark) (ii) Asset Turnover ratio (1 mark) (iii) Gross profit percentage (1 mark) (iv) Profit margin ratio (1 mark) (v) Current ratio (1 mark) (vi) Quick/Acid test ratio (1 mark) (vii) Days' sales in receivables (1 mark) (viii) Days' sales in inventories (ix) Debt to equity ratio (1 mark) (x) Times-Interest-Earned ratio (1 mark) (b) Based on the 10 ratios calculated in (a), interpret the performance of Topcat in year 2021 (as compared against the industry, and also against Topcat's ratios in the previous two years), for the following areas: (i) profitability (7 marks) (ii) ability to pay current liabilities (6 marks) (iii) ability to sell inventories and to collect receivables (6 marks) (iv) ability to pay long-term debt (6 marks)