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In analyzing the financial statements of an entity, the following ratios were calculated : 2015 2016 current ratio 2:1 1.3:1 quick ratio 1:1 0.7:1 receivable

In analyzing the financial statements of an entity, the following ratios were calculated :

2015 2016

current ratio 2:1 1.3:1

quick ratio 1:1 0.7:1

receivable turnover 30 days 45 days

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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