7. Halal Berhad’s comparative financial statements for the years ending 31 December 2020, and 2019, are as follows. Halal Berhad’s common stock market price was RM35 on 31 December 2020 and RM40 on 31 December 2019. Halal Berhad Statement of Profit or Loss and Other Comprehensive Income For the years ended 31 December 2020 and 2019 2020 (RM’000) 2019 (RM’000) Sales 1,200 1,000 Cost of goods sold 500 475 Gross Profit 700 525 Selling expenses 240 200 Administrative expenses 180 150 Total operating expenses 420 350 Income from operations 280 175 Other income 166 225 446 400 Other expense (interest) 66 60 Income before income tax 380 340 Income tax expense 80 60 Net income 300 280 Halal Berhad Statement of Financial Position As at 31 December 2020 and 2019 2020 (RM’000) 2019 (RM’000) Assets Current Assets Cash 450 400 Marketable Securities 300 260 Accounts receivable (net) 130 110 Inventories 67 58 Prepaid Expenses 153 139 Total Current Assets 1100 967 Long-term investments 2350 2200 Property, plant, and equipment (net) 1320 1188 Total Assets 4770 4355 Liabilities Current Liabilities 440 400 Long-term Liabilities Mortgage note payable, 8% due 2025 100 0 Bonds payable, 5%, due 2021 1000 1000 Total long-term liabilities 1100 1000 Total liabilities 1540 1400 Stockholders’ Equity Preferred RM0.75 stock, RM10 par 200 200 Common stock, RM10 par 100 100 Retained earnings 2930 2655 Total stockholders’ equity 3230 2955 Total liabilities and stockholders’ equity 4770 4355 REQUIRED: The Ratio of liabilities to Stockholders’ equity for Halal Berhad in 2020 and 2019 is 0.48 and 0.47 respectively, which can be interpreted as: Select one: A. an increase from 0.47 to 0.48 during 2020, thus revealing that creditors have an adequate margin of safety. B. there is no correct answer. C. an increase from 0.47 to 0.48 during 2020, thus revealing that creditors have an inadequate margin of safety. D. an increase from 0.47 to 0.48 during 2020, thus revealing that creditors have a margin of safety.