Question: Question 1: a) Describe how the current ratio and return on equity are computed from the information available in financial statements. Briefly explain the use

Question 1:

a) Describe how the current ratio and return on equity are computed from the information available in financial statements. Briefly explain the use of these ratios in determining the financial strengths of a business. (7 marks)

b) Describe the risk-return relationship and briefly explain the returns that investors will look for when evaluating the potential investments. (8 marks)

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