Question 6 The following are the financial ratios of FANCY HANDBAGS, a retailer of designer handbags: 2016 1.2:10.8:1 1.7:1 2.9:1 25 days 39 days 40 days 62 days 2015 RATIO Quick ratic Current ratio Receivables turnover Inventory turnover period Return on equity Debt ratio 41% 45% 18% 40% FORMULA TABLE FORMULA C.A.-inventory/C.L Current assets / current liabilities BENCHMARK 1.2 times INDICATOR Quick ratio Current ratio Receivables turnover Inventory turnover 2.0 times C Accounts receivable/ credit sales x 365 Inventory/cost of goods sold x 365 Credit terms 30 days none I period Return on equity Debt ratio Net profit/equity Risk free rate is 4% 30% Liabilities/assets