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) In analysing the financial statements of an entity, the following ratios were calculated: 2011 2012 Current ratio 2:1 1.3:1 Quick ratio 1:1 0.7:1 Receivables
) In analysing the financial statements of an entity, the following ratios were calculated:
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| 2011 | 2012 |
| Current ratio | 2:1 | 1.3:1 |
| Quick ratio | 1:1 | 0.7:1 |
| Receivables turnover (days) | 30 | 45 |
| Inventory turnover | 3 times | 4 times |
| Profit margin | 10% | 7% |
Discuss any potential weaknesses that these ratios may reveal in the overall performance of the entity, and comment on possible causes for these results
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