Question 7-Performance Measurement (15 marks) The following selected ratios are available for Lockers Ltd. for the three most recent years: 3 Asset turnover 4 Average collection period 5 Current ratio 16 Days in inventory 17 Debt to total assets 8 Dividend yield 9 Return on assets 20 Return on equity 21 Times interest earned 22 Price-earnings ratio 23 2020 1.4 times 2019 1.4 times 2018 1.8 times 45 days 2.5:1 38 days 31 days 2.2:1 1.5:1 115 days 100 days 93 days 65.1% 54.8% 45.2% 1.4% 1.4% 1.3% 5.4% 5.8% 6.0% 8.9% 9.3% 10.7% 2.8 times 3.9 times 5.2 times 12.6 times 20.5 times 27.5 times 24 Note: For questions a) to d), make sure you provide detailed explanation over the three-year period. You will get few marks if you state only an increase or 25 decrease in the ratios as your answers to the questions. 26 27 Instructions 28 a) (2.5 marks). Customers are given 30 day-grace period to pay for goods upon receipt of the goods. Assess the effectiveness of the company's credit and 29 collection policies using relevant ratio(s). 30 31