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the table below presents the calculated ratios of X LTD

Ratio

$2023$

$2022$

$2021$

$2023$

Industry Average

Debt Ratio

$45\%$

$40\%$

$35\%$

$35\%$

Inventory Turnover Ratio

$62\mathrm{.}65$x

$42\mathrm{.}42$x

$32\mathrm{.}25$x

$53\mathrm{.}25$x

Cash Ratio

$0\mathrm{.}54$

$0\mathrm{.}54$

$0\mathrm{.}012$

$0\mathrm{.}015$

Inventory Turnover Period

$113$ days

$98$ days

$94$ days

$130\mathrm{.}25$ days

Capital Gearing Ratio

$75\%$

$85\%$

$90\%$

$88\%$

Net Profit Margin

$8\mathrm{.}2\%$

$7\%$

$6\%$

$7\mathrm{.}5\%$

Total Asset Turnover Ratio

$0\mathrm{.}54$

$0\mathrm{.}65$

$0\mathrm{.}70$

$0\mathrm{.}40$

Quick Ratio

$1\mathrm{.}038$

$1\mathrm{.}03$

$1\mathrm{.}029$

$1\mathrm{.}031$

Current Ratio

$1\mathrm{.}33$

$1\mathrm{.}21$

$1\mathrm{.}15$

$1\mathrm{.}25$

Times Interest Earned Ratio

$3\mathrm{.}9$

$4\mathrm{.}375$

$4\mathrm{.}45$

$4\mathrm{.}65$

NB

ensure you use the ideal ratios as provided in the course notes

required

focusing on the calculated ratios above, evaluate the company against the following items

the liquidity of the business when evaluated against the current assets is ideal

Answer $1$

true or false

the ability of the company to pay its financing costs is highly compromised

Answer $2$

true or false

the company has been able to achieve above average profitability over the whole duration under review

Answer $3$

true or false

the company has financed a significant portion of business capital using equity

Answer $4$ true or false

the company can comfortably pay its obligations from the available cash and cash equivalents

Answer $5$

true or false

the company has been able to complete more buy$-$sell cycles compared to its competitors

Answer $6$ true or false

the company has borrowed excessively compared to its size thus making it a highly geared entity

Answer $7$

true or false

the company will give very good dividends to its shareholders

Answer & Explanation Solved by verified expert

See Answer