Question 5 - This question has 2 parts (6 marks)

[3 + 3]= 6 marks

SpotSpot Pty. Ltd.'s most recent summary of key financial information as presented below:

Financial Ratios

2019

2020

Current Ratio

1.3 : 1

2.0 : 1

Quick Ratio

1.4 : 1

0.9 : 1

Accounts Receivable Turnover

6.8 times

8.4 times

Inventory Turnover

3.8 times

2.6 times

Return on Assets

9.7 cents

12.4 cents

Return on Equity

10.2 cents

13 cents

Required:

(a)

Is the 2020 inventory turnover ratio for SpotSpot Pty. Ltd. a progress or a regress?Explain your answer.[3 marks]

(b)

Is the 2020 accounts receivable turnover ratio for SpotSpot Pty. Ltd. a progress or a regress?Explain your answer.[3 marks]