Q1 You are the financial Manager of the company, you are responsible for keeping the board of directors informed about the company's financial activities. At the recent board meeting, you presented the following financial data: 2004 100.0% 2006 Sales trend percent 147.0% Selling expenses to net sales 10.1% Sales to plant assets 3.8 to 1 Current ratio 2.9 to 1 Acid-test ratio 1.1 to 1 Inventory turnover 7.8 times Accounts receivable T/O 7.0 times Total asset turnover 2.9 times ROA 9.1% ROE 9.75% Profit margin 3.6% 2005 135.0% 14.0% 3.6 to 1 2.7 to 1 1.4 to 1 9.0 times 7.7 times 2.9 times 9.7% 11.50% 3.8% 15.6% 3.3 to 1 2.4 to 1 1.5 to 1 10.2 times 8.5 times 3.3 times 10.4% 12.25% 4.0% After the meeting, the company's CEO held a press conference with analysts in which she mentions the following ratios: 2006 2005 2004 Sales trend percent 147.0% 135.0% 100.0% Selling expenses to net sales. 10.1% 14.0% 15.6% Sales to plant assets 3.8 to 1 3.6 to 1 3.3 to 1 Current ratio 2.9 to 1 2.7 to 1 2.4 to 1 Required: Use these data to answer each of the following questions: a. Is it becoming easier for the company to meet its current debts on time and to take advantage of cash discounts? b. Is the company collecting its accounts receivable more rapidly over time? c. Is the company's investment in accounts receivable decreasing? d. Are dollars invested in inventory increasing? e. Is the company's investment in plant assets increasing? f. Is the owner's investment becoming more profitable? g. Is the company using its assets efficiently? e. Why do you think the CEO decided to report these 4 ratios instead of the 11 ratios that you prepared? f. Comment on the possible consequences of the CEO's reporting decision. Keeping in mind 'Ethics in Financial Reporting