Question # 02 (Marks 10) Current ratio Acid-test ratio Debt-to-total-assets Inventory turnover Average collection period Total...

Transcribed Image Text:

Question # 02 (Marks 10) Current ratio Acid-test ratio Debt-to-total-assets Inventory turnover Average collection period Total asset turnover Net profit margin Return on investment (ROI) Return on equity (ROE) 20X1 4.2 2.1 23% 8.7x 33 days 3.2x 3.8% 12.1% 15.7% 20X2 2.6 1.0 33% 5.4x 36 days 2.6x 2.5% 6.5% 9.7% 20X3 1.8 0.6 47% 3.5x 49 days 1.9x 1.4% 2.8% 5.4% Considering the above ratios of a firm what could be the possible reason(s) of decline in Current ratio, acid test ratio and net profit margin? Question # 02 (Marks 10) Current ratio Acid-test ratio Debt-to-total-assets Inventory turnover Average collection period Total asset turnover Net profit margin Return on investment (ROI) Return on equity (ROE) 20X1 4.2 2.1 23% 8.7x 33 days 3.2x 3.8% 12.1% 15.7% 20X2 2.6 1.0 33% 5.4x 36 days 2.6x 2.5% 6.5% 9.7% 20X3 1.8 0.6 47% 3.5x 49 days 1.9x 1.4% 2.8% 5.4% Considering the above ratios of a firm what could be the possible reason(s) of decline in Current ratio, acid test ratio and net profit margin?

Answer rating: 100% (QA)

The possible reasons of decline in Current ratio acid ... View the full answer