MEMO A start up plumbing business of Jag and Elk has a small size and simple structure Jag is responsible for residential customer Elk is responsible for commercial business One part time worker manages inventory and customer service at the warehouse With simple structure of Jag Elk Pipes Net profit margin of 10 09 Net income Total sales 10 451 103 611 is considered good It indicates that this business has strong pricing strategy exercises good cost control and efficient management Gross profit margin is 53 Gross margin Total sales 54 503 103 611 It means a company does well in managing its cost of sales and has ability to cover for operating financing and other costs Current ratio is 2 8 Current assets Current liabilities 68 496 23 944 This is a good current ratio because the business has 2 8 times more current assets than liabilities to cover its debts The quick ratio is 1 21 Current assets Inventory Prepaid expense Current liabilities It is also a good quick ratio because the company s quick assets are 1 21 times its current liabilities It has enough liquid assets to cover its current liabilities