2. State which of these areas of business activity (profitability, liquidity or financial stability) do the following ratios relate to? i. Times Interest Earned ii. Return on Assets iii. Current Ratio iv. Inventory turnover. + 1. Insert your brief comments about the trends in the following ratios in the table below. Ratio Formula 2018 2019 2020 Is this a GOOD or Why is this a good or bad trend (what could this trend mean for the business) a BAD trend? Profit margin Profit/Sales Revenue 12% 10% 6% Inventory turnover Cost of Sales /Average Inventory 2 Times per year 3 Times per year 4 Times per year Average collection period ACCT 1008 Accounting for Business Week 8 - Weekly test held in Lecture Financial Statement Analysis 365/Receivables 30 Days to 45 Days to 65 Days to turnover collect collect collect Current Current Ratio Assets/Current Liabilities receivables receivables receivables 2.0 1.5 40 0.7