On the Assessment 5, Part 2 Template you will find selected ratios for a company over a two-year period. Compare the ratios, and in a separate document (Word or Excel), submit your answers to the following questions:

1. What does the calculation of each ratio represent?
2. How does year one compare with year two, and what trend can be seen when you compare the two years?
3. Is the trend from year one to year two positive or negative?
4. What are the possible reasons for the trend?
5. What recommendations do you have for turning a negative trend to a positive trend?

6. Ratio	Year 1	Year 2
   Current ratio	3.12:1	2.96:1
   Quick ratio	1.34:1	1.02:1
   Receivables turnover	9.7 times	10.2 times
   Inventory turnover	2.4 times	2.3 times
   Profit margin	11.4%	12.6%
   Asset turnover	1.21 times	1.22 times
   Return on assets	13.7%	15.4%
   Return on equity	28.5%	29.3%
   Price-earnings ratio	10.4 times	12.4 times
   Debt ratio	50.2%	45.3%
   Times interest earned	9.6 times	13.0 times