Question 3 (20 marks) Part A You have been provided with the following ratios of HGC Ltd for the financial years 2017, 2018 and 2019. The financial year of the firm ends on 31 December of each year. 2017 2018 2019 1 Gross profit margin 51.44% 47.18% 49.14% 2 Expenses Margin 22.69% 24.78% 23.64% 3 Operating profit margin 28.75% 22.40% 25.50% 4 Return on Assets 34.50% 21.28% 26.52% 5 Return on Equity 28.74% 17.73% 22.10% 6 Asset turnover 1.20times 0.95times 1.04 times 7 Period of inventory turnover 104days 99days 101 days 8 Trade receivables collection period 81days 97days 95days 9 Trade payables repayment period 69 days 72days 74days 10 Current Ratio 2.74:1 2.12:1 2.43:1 11 Quick asset ratio 1.78:1 1.37:1 1.57:1 12 Interest Cover 11.23times 8.74 times 9.56times 13 Gearing (Debt/Equity) 41.42% 40.58% 42.24% 14 Cash Operating Cycle 116days 124days 122 days Required: (a) Discuss the performance of HGC Ltd for the financial year ended 31 December 2019 in comparison with the financial years ended 31 December 2017 and 2016 using the ratio of HGC Ltd provided in the above table. (12 marks)