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Question

You are the financial director of Farm Poultry Enterprises. The following information is prepared by your head

accountant and presented to you for the current year (2018) and the comparative year (2017):

                                                                

2018

2017             

Return on Shareholder's Equity (ROE)     

11%

15%              

Net Profit before tax (Rm)                           

R2.25

R3                

Current ratio                                           

1.4:1

1.6:1             

Acid-test ratio                                           

0.4:1

0.9:1             

Debtor's collection period                        

58 days

67 days         

Creditor's payment period                       

30 days

30 days         

Inventory turnover rate                            

6 times

4 times

Required:

After an analysis and interpretation of the above information prepare a detailed report that you would present to your Board of Directors.

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