You are provided with the financial indicators calculated from the financial statements of Small LTD for the past two years ended 30 April. The business uses the perpetual inventory system to value stock and a gross profit mark-up of 75% on cost. 2022 2021 Solvency ratio 3.0:1 3.2:1 Current ratio 3.8:1 3.1:1 Acid test ratio 0.6:1 0.6:1 Rate of stock turnover 3 4.1 Trading stock deficit as a % of cost of sales 3% 1% Stock holding period 120 days 90 days Credit terms granted by creditors 60 days 60 days Debtors average collection period 28 days 35 days Return on shareholders equity: after tax 16% 18% Return on shareholders equity: before tax 22% 26% Earnings per share 51 cents 63 cents Dividend per share 12 cents 5 cents Changes in total sales 17% decrease 10% increase Gross profit on cost of sales 75% 67% Gross profit on sales 42% 40% Net profit after tax on sales 11% 14% Operating expenses on sales 37% 30% Operating profit on sales 15% 20% Return on total capital employed 26% 30% Debt/equity ratio 0.6:1 0.3:1 Interest rate on long term loans 14% 12% Net asset value per share 310 cents 380 cents Market price per share 330 cents 390 cents Sales R3 154 000 R3 800 000 REQUIRED: Study the financial indicators and then answer the questions which follow. Explain the answers to each of the following questions and quote the actual ratios / percentages from the above list to support your answers. 3.1 Should the directors be satisfied with the liquidity of the business and the control of stock?