Financial analysis: A friend has approached you regarding an investment opportunity in a logistics business. They have provided you with a set of ratios and have asked you to prepare a report, analyzing the business and making a recommendation as to whether or not they should make the investment.

Below is the list of ratios from 2020 and 2019:

Profitability ratios

1. Return on assets: 5.38% in 2020 and 4.48% in 2019

2. Return on equity:16.55% in 2020 and 15.08% in 2019

3. Gross profit margin: 32.91% in 2020 and 31.75 in 2019

4. Operating profit margin: 8.95% in 2020 and 9.18% in 2019

5. Net profit margin: 4.42% in 2020 and 3.95% in 2019

Turnover ratios

1.Total asset turnover: 1.22 times in 2020 and 1.14 times in 2019

2. Trade receivable turnover: 9.08 times 2020 and 8.57 times in 2019

3. Trade receivable turnover time: 39.65 days in 2020 and 42 days in 2019

4. Trade payable turnover: 5.07 times in 2020 and 5.15 times in 2019

5. Trade payable turnover time: 71 days in 2020 and 69.93 days in 2019

6. Inventory turnover: 18.29 times in 2020 and 22.34 times in 2019

7. Inventory turnover time: 19.69 days in 2020 and 16.12 days in 2019

Liquidity ratios

1. Current ratio: 1.10 in 2020 and 1.04 in 2019

2. Quick ratio: 0.93 in 2020 and 0.86 in 2019

Solvency ratios

1. Debt to assets ratio: 0.66 in 2020 and 0.69 in 2019

2. Debt to equity ratio: 1.93 in 2020 and 2.24 in 2019

3. Finance cost coverage ratio: 2.77 times in 2020 and 2.38 times in 2019