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The following extract financial information relates to COV Inc. over the two years: Year 2019...

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Finance

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The following extract financial information relates to COV Inc. over the two years: Year 2019 2018 Current ratio 2.2: 1 1.3: 1 Quick ratio 1.68: 1 1.08:1 Inventory turnover 5 times 8 times Receivables period 91 days 55 days Payables period 64 days 118 days The shareholders of the company are worried about its working capital management. As a Managing Director, one of the institutional shareholder has called you to make a quick comment on the situation. Required: a) Based on the financial information provided above for COV Inc., comment on the working capital management of the company. (9 marks) b) The following financial ratios are used to assess the performance and financial position of a company: i) ROCE ii) Inventory turnover Net Profit Margin iv) Earnings Per Share v) Dividend Cover Explain the meaning of each ratio stated above. (10 marks) c) Explain the difference between accounting profit and cash. (6 marks)

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