The Bouknight Hotel has financial ratios calculated from its annual financial statements for the past four years as follows:

Ratio Years 1 2 3 4 Current ratio 1.04 ae: 1.08 1.20 Food inventory turnover 20 times 25 times 28 times 25 times Accounts receivable turnover 24 times 20 times 18 times 17 times Debt-equity ratio 2.0 13 7 1.6 Profit margin 10.1% 8.5% 8.2% 7.5%

Asset turnover ratio 1.2 times 1.5 times 1.8 times 2.0 times Reynard Bouknight, the owner and manager, desires help in assessing the hotel’s changing financial health.

Required:

1. Has the hotel’s liquidity position improved over the 4 year period?

2. Has the hotel’s return on assets improved over the 4 years?

3. Explain why or why nota financial institution would lend more money to this hotel in year 4 than in year 1.