PART 1

Below are the financial ratios calculated from the 2020 annual report of PVC Pipes Ltd.

Ratio	2020	2019
Current	1.52x	1.48x
Quick	1.01x	0.98x
Average collection period	65 days	58 days
Days inventory held	36 days	28 days
Days payable outstanding	61 days	47 days
Cash conversion cycle	40 days	39 days
Fixed asset turnover	4.91x	4.02x
Total asset turnover	1.70x	1.43x
Debt to total assets	67.10%	63.08%
Long Term debt to total capitalization	46.82%	42.51%
Times interest earned	(5.10x)	1.65x
Fixed charge coverage	(2.34x)	1.40x
Cash flow adequacy	0.32x	0.87x
Gross profit margin	10.10%	12.81%
Operating profit margin	(5.93%)	2.75%
Net profit margin	(4.98%)	0.91%
Cash flow margin	3.84%	7.00%
Return on assets	(8.63%)	1.28%
Return on equity	(25.49%)	3.51%
Cash return on assets	6.90%	9.10%

REQUIRED:

1. Using the financial ratios above, illustrate the short-term liquidity, operating efficiency, capital structure and long-term solvency and profitability of PVC Pipes Ltd. (40 marks) please 400-450 words