Question 5 The following table of ratios is available to summarize the performance of two companies at the end of the trading year: Company B Format Company A 36.0 48.0 % 55.0 66.0 96 Ratio ROCE Gross Profit Marign Net Profit Margin Current Ratio Acid Test Ratio Stock Turnover Ratio 42.0 40.0 96 2.1 1.7 0.7 1.1 3.1 6.9 times 21.0 43.0 days Accounts Payable Days Accounts Recievable Days 12.0 47.0 days In each of the following multiple choice questions, select the most appropriate response: 5.1) a) Company A has a smaller ROCE than company B. b) Company A has a better ROCE than company B. c) Company B has a better ROCE than company A. d) Company B returns more stock than company A. 5.2) a) Company A has a smaller GPM than company B, b) Company B has a better GPM than company A, C) Company B makes more profit overall than company A. d) Company A is more profitable than company B. 5.3) a) Company A makes more net profit than company B, b) Company A has a higher net profit margin than company B, c) Company A makes more profit overall than company B, d) Company B has a worse net profit margin than company A. 5.4) a) Both companies have an acceptable current ratio, b) Company B is facing liquidity problems, C) Company A has more money in the bank than company B. d) Company A has more current assets than company B. 5.5) a) Company B does not hold enough stock, b) Company A should reduce its stock size, C) The ATR for company A is acceptable, d) The ATR for company B is too high. 5.6) a) Company B buys more stock than company A, b) Company B holds less stock than company A, c) Company B cycles through its stock more quickly than company A, d) Company A sells stock more quickly than company B. 5.7) a) Company B takes longer to pay suppliers than company A, b) Company A takes longer to pay suppliers than company B. c) Company B buys more stock from suppliers than company A, d) Company A buys more stock from suppliers than company B. 5.8) a) Company B takes longer to collect money from its credit customers than company A, b) Company A takes longer to collect money from its credit customers than company B, c) Company B sells more stock on credit than company A, d) Company A sells more stock on credit than company B