QUESTION 3: As a consultant, the Chief Accountant of Ecomyni Company Limited has provided you with equivalent accounting ratios for the company in 2006 and 2007. They are as follows: Ratio Current ratio Quick ratio Debtors turnover Creditors turnover Stock turnover Gearing 2006 1.8:1 1.2:1 49 days 51 days 23 days 26 % 2007 1.9:1 1.2:1 38 days 35 days 25 days 29 % You have been tasked to define and explain the purpose of the following: a. Current and quick ratio. (2 marks) b. c. d. Debtors and creditors turnover. (2 marks) Gearing ratio. (2 marks) Comment on the financial performance of the company over the two-year period as revealed by the financial ratios. (4 marks) TOTAL 10 MARKS 3