As the financial consultant to a small budding firm, you came across the following financial details during the annual health diagnostics you usually conduct. Net income for the year just ended stands at $24,500. Sales for the year in question was $300,000. Current assets, which includes an inventory value of $26,000 also stood at $80,000. Equity, long-term debt and total current liabilities are $200,000; $150,000 and $120,000 respectively.
Required: Using the appropriate ratios, comment and advise the firm on its liquidity and profitability situation.