Q3. Selected financial ratios for ABC, Incorporated, are as follows: Ratios 20x120x2 20x3 Current ratio 4.5 2.5 1.5 Acid-test ratio 2.5 1.5 0.5 Debt-to-total-assets 25% 35% 45% Inventory turnover 8.5x 5.5x 3.5x Average collection period 35 days 37 days 48 days Total asset turnover 3.5x 2.5x 1.5x Net profit margin 4% 3% 2% Return on investment 12% 7% 3% Return on equity 15% 10% 6% (a) Why did return on investment decline? (5 marks) (b) Was the increase in debt a result of greater current liabilities or of greater long-term debt? Briefly explain. (2.5 marks)