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4 - The following ratios were calculated for Dynamic Data Ltd: [20 marks] RATIOS 2020 2021 2021 Industry Average Quick Ratio 1.2:1 0.6:1 1.0:1 Current

4 - The following ratios were calculated for Dynamic Data Ltd: [20 marks]

RATIOS

2020

2021

2021 Industry Average

Quick Ratio

1.2:1

0.6:1

1.0:1

Current Ratio

2.1:1

1.3:1

2.0:1

Inventory Turnover

8 times

11 times

9 times

Average Collection Period of Receivables

32 days

55 days

30 days

Equity Ratio

70%

40%

60%

Profit Margin

15%

10%

20%

Return on Ordinary Equity

10%

7.5%

15%

Note: The companys credit payment terms for customers is 30 days.

Required

Given the above ratios, comment on the performance of Dynamic Data Ltd in 2021 in relation to;

1. Profitability, 2. Liquidity, and

3. Financial stability (solvency)

Also include any possible problems and possible causes thereof and provide an overall conclusion of your analysis of the company.

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