From the data provided below, Ms Smith, the Managing Director of Smith's PLC, has asked you to explain the current financial situation of her company. She has requested that you use as the basis of your analysis the following liquidity and perfor mance ratios (KPIs): Liquidity ratios Current Assets Current Ratios Current Liabilites A measure of the level of safety involved in relying on current assets being sufficient to pay current liabilities Quick Assets Current Liabilites Acid Test This is a measure of the level of safety involved in relying on 'Quick' assets to cover liabilities. (Note: 'Quick' assets are usually taken as cash and debtors) Debtors Sales x365 Average time taken to obtain payment from debtors Sales The number of times stock is turned over per trading period Stock Performance ratios Profit Capital Employed x100 Return on capital Here 'profit' is usually taken as being the 'profit before interest and tax' is deducted. This ratio measures the creation of wealth relative to the economic wealth tied up in the process. Profit Sales x 100 = amount of profit generated by sales made during trading periods Sales Capital Employed x100 the amount of times that the capital is turned over Ms Smith would like you to support your ratio calculations with a very brief descriptive commentary regarding Liquidity and Profitability. CS Scanned with CamScanner