Vee-Jay Company (Pty) Ltd Extracted the following Ratios from its books for the year 2020 together with the relevant industry averages. RATIOS 2020 Industry average

1. Current Ratio 1,9 2 2.

Acid test ratio 0,8 and industry average is 1

3. Inventory Turnover 4 times and industry average is 6 times

4. Debtors collection period (days) 51 days and industry average is 40 days

5 Creditors payment period (days) 61 days and Industry average 50 days

Required:

1.For each of the above five ratios, answer the following: a. what does the ratio measure and state whether there is an improvement or decline in the ratio in comparison with the industry average 2. Comment on the companys overall liquidity position in comparison with industry