Question: QUESTION 2 The tables below present business situations in three different companies. Daffodile Ltd 2019 2018 Current ratio 3.1:1 2.1:1 Quick ratio 0.8:1 1.4:1 Inventory
QUESTION 2
The tables below present business situations in three different companies.
- Daffodile Ltd
|
| 2019 | 2018 |
| Current ratio | 3.1:1 | 2.1:1 |
| Quick ratio | 0.8:1 | 1.4:1 |
| Inventory turnover | 165 days | 110 days |
|
| 2019 | 2018 |
| Average settlement period for accounts receivable | 63 days | 21 days |
| Average settlement period for accounts payable | 50 days | 48 days |
Based on the above ratios, write a comment on the liquidity in the company. (9 points)
- Hibiscus Ltd
Based on the above ratios, write a comment on the efficiency in the company. (7 points)
- Daisy Ltd
|
| 2019 | 2018 |
| Gross profit margin | 40% | 15% |
| Profit margin | 10% | 10% |
Based on the above ratios, write a comment on the profitability of the company. (8 points)
(9 + 7 + 8 = 24 marks)
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