Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
) 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:
| 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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started