QUESTION 1 (25 Marks)

1.1 REQUIRED

Study the information provided below and answer the following questions:

1.1.1 Calculate the return on net assets of each company. (3 marks)

1.1.2 Comment on the returns and risk associated with the different working capital policies from the figures provided below: (8 marks)

Information
	Company A	Company B	Company C
	Conservative	Moderate	Aggressive
	R	R	R
Statement of Comprehensive Income
Sales	3 000 000	3 000 000	3 000 000
Operating profit	337 500	337 500	337 500
Statement of Financial Position
Non-current assets	1 500 000	1 500 000	1 500 000
Net working capital	1 125 000	687 500	50 000
Current assets	1 875 000	1 625 000	1 175 000
Current liabilities	(750 000)	(937 500)	(1 125 000)
Analysis	Company A	Company B	Company C
Return on net assets	?	?	?
Current ratio (risk)	2.50:1	1.73:1	1.04:1