Question: Question b [14 marks] a) Espresso Bhd. has a ROE of 23.1 percent, net profit margin of 4.9 percent and a total assets turnover of

Question b [14 marks] a) Espresso Bhd. has a ROE of 23.1 percent, net profit margin of 4.9 percent and a total assets turnover of 2.6 times. Its peer group has a ROE of 23.1 percent but has a better net profit margin than Espresso which is 5.3 percent, and total asset turnover of 3.0 times. Explain how Espresso managed to achieve the same level of profitability as reflected by the ROE of its peer group. (6 marks) b) Refer to the table below, discuss Espresso's short-term solvency and turnover performance relative to its peer group. (8 marks) Ratios Espresso Bhd. Peer Group DSO 32.5 days 27.5 days Total asset turnover 2.6 3.0 Inventory turnover 1.7 2.7 Quick ratio 0.7 1.4 - END OF PAPER

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