Question 4 (11 marks) Carmine Martin, the chief executive officer of Conservation Ltd., whose financial information for the last three years is summarised in the following table: Current ratio Quick ratio Debtors turnover Inventory turnover Dividends per share Return on assets (ROA) Return on equity (ROE) Asset turnover Profit Margin Leverage 2016 3.1 0.6 7.5 6.5 $4.10 0.077 0.154 1.1 0.07 2 2015 2.5 1.1 8.2 7.7 $4.10 0.065 0.156 1.3 0.05 2.4 2014 1.8 1.5 10.5 8.8 $4.10 0.051 0.153 1.7 0.03 3 Industry average ROE 0.05 0.07 0.08 Carmine asks you to provide the answers to the following questions about the trends in Conservation Ltd financial performance. Note: support your answers with appropriate ratio calculations if required. Ratio formulae are provided on the last page of the exam paper. Required: Question 4 A (2 Marks) Are customers of Conservation Ltd. paying off their invoices slower in 2016 than they did in 2014? Support your answer. Question 4 B (2 Marks) Are Conservation Ltd. selling their inventory faster or slower in 2016 than they did in 2014? Support your answer. E Font family - Font size Paragraph H B Path:p Words:0 Question 4 C (2 Marks) What is the main reason(s) that Conservation Ltd has seen an increase in return on assets (ROA) over the last 3 years? Support your answer. Font family - Font size Paragraph H B Question 4 D (2 Marks) Why is the return on equity (ROE) ratio relatively stable over the last 3 years when return on assets (ROA) has been increasing? Support your answer. Font family Font size Paragraph Path:p Words:0. Question 4 E (2 Marks) Comment on the liquidity of Conservation Ltd over the last 3 years. Support your answer. 3 Font family ~ Font size - Paragraph - H Question 4 F (1 Mark) Can we compare the ratios of two companies, when one is reporting its financial statements in US$ and the other in Japanese Yen? Support you answer. Font family Font size Paragraph