QUESTION 3 Teras Company had the following comparative current assets and current liabilities:

During the year 2022, credit sales and cost of goods sold were RM600,000 and RM350,000, respectively. Note: Assume it has 365 days in a year.

	2022	2021
current asset
cash	20,000	30,000
short-term investment	40,000	10,000
note receivables	60,000	50,000
accounts receivables	55,000	95,000
inventory	50,000	40,000
prepaid expenses	35,000	20,000
current liabilities
accounts payable	100,000	80,000
other payable	40,000	30,000
salaries payable	40,000	30,000
tax payable	20,000	15,000

a. Determine the following ratios for the year 2022: i. Current ratio (10 marks) ii. Quick or acid-test ratio (4 marks) iii. Account receivable turnover ratio (3 marks) iv. Account receivable turnover in days (2 marks) v. Inventory turnover ratio (3 marks) vi. Inventory turnover ratio in days (2 marks)

b. Evaluate the company's financial performance by using the above findings of quick ratio, account receivable turnover ratio and inventory turnover ratio. (21 marks)

c. A higher inventory turnover ratio denotes a healthy business, whereas a lower ratio can indicate trouble. When inventory turnover is breakdown into business components, its significance as a critical business efficiency metric becomes clear. Describe THREE (3) importance to improve Inventory Turnover. (5 marks)