Question
REQUIRED 3.1 Use the information provided in Question 2 to calculate the following ratios for 2019 . (Where applicable, round off answers to two decimal
| REQUIRED | |||
| 3.1 | Use the information provided in Question 2 to calculate the following ratios for 2019. (Where applicable, round off answers to two decimal places.) | ||
| 3.1.1 | Net profit margin | (2 marks) | |
| 3.1.2 | Average collection period | (2 marks) | |
| 3.1.3 | Inventory turnover | (2 marks) | |
| 3.1.4 | Financial leverage | (2 marks) | |
| 3.1.5 | Acid-test ratio | (2 marks) | |
| 3.1.6 | Debt to asset ratio | (2 marks) | |
| 3.1.7 | Return on equity | (2 marks) | |
| 3.2 | Comment on the return on equity calculated above. (Note: The return on equity for 2018 was 18%.) | (4 marks) | |
| 3.3 | Refer to the appropriate ratio in question 3.1 and explain whether the company will be able to pay its short-term debts when business conditions are not favourable. | (2 marks | |
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