You are given the summarised results of the VIVA business as follows:

Statement of Profit or loss for the yearended 31 December 2020

$'000Revenue65,000Cost of sales42,000Gross profit23,000Operating expenses15,500Profit7,500

Statement of Financial Position as at 31 December 2020

$000$000Non-current assets12,500Current AssetsInventory14,000Receivables16,000Cash50030,50043,000Equity and LiabilitiesCapital and Reserves19,000Current liabilities (payables only)24,00043,000

Required:

1. Calculate the following ratios, clearly showing the figures used in the calculations.
2. Current ratio
3. Quick/acid test ratio
4. Inventory turnover in days
5. Accounts receivable collection period
6. Accounts payable payment period
7. Gross profit percentage
8. Net profit percentage
9. ROCE
10. Asset turnover(10 marks)
11. Below are the industry averages, based on the figures given and your calculations, comment on the performance of the company.

Current ratio1.50Quick/acid test ratio0.75Inventory turnover in days115 daysAccounts receivable collection period75 daysAccounts payable payment period120 daysGross profit percentage33%Net profit percentage22%ROCE46%Asset turnover3.6 times

(7 marks)

3.Comment on limitation of ratio(3 marks)