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BUS-FP3061 â Fundamentals of AccountingRatioYear 1Year 2Current ratio3.12:12.96:1Quick ratio1.34:11.02:1Receivables turnover9.7 times10.2 timesInventory turnover2.4 times2.3 timesProfit margin11.4%12.6%Asset turnover1.21 times1.22 timesReturn on assets13.7%15.4%Return on equity28.5%29.3%Price-earnings ratio10.4 times12.4 timesDebt ratio50.2%45.3%Times interest earned9.6 times13.0 timesWhat does the calculation of each ratio represent?How does year one compare with year two, and what trend can be seen when you compare the two years?Is the trend from year one to year two positive or negative?What are the possible reasons for the trend?What recommendations do you have for turning a negative trend to a positive trend?
