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The following information is available for A Bhd and B Bhd, similar companies operating in the same industry. Discuss the conditions of Company A

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The following information is available for A Bhd and B Bhd, similar companies operating in the same industry. Discuss the conditions of Company A compared to Company B using the available information. A Bhd B Bhd Current ratio 1.4:1 2.2:1 Acid-test ratio 0.8:1 2.2:1 Accounts receivables turnover 8.3 6.4 Inventory turnover 2.9 5.0 Days' sales in inventory 130.8 119.1 Days' sales uncollected 45.6 51.8 Profit margin ratio 5.4% 0.2% Total asset turnover 1.2 4.0 Return on total assets 6.8% 0.2% Return on ordinary shareholders' equity 14.6% 1.4% (20 marks)

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