Why did return on investment decline

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Reference no: EM132581845

Ratios

2018

2019

2020

Current ratio

4.2 :1

2.6:1

1.8:1

Acid test ratio

2.1:1

1.0:1

0.6:1

Debt to total assets

23%

33%

47%

Inventory turnover ratio

8.7 times

5.4 times

3.5 times

Average collection period

33 days

36 days

49 days

Total assets turnover

3.2 times

2.6 times

1.9 times

Net profit margin

3.8%

2.5%

1.4%

Return on Investment

12.1%

6.5%

2.8%

Return on equity

15.7%

9.7%

5.4%

Question a. Why did return on investment decline?

Question b. Was the increase in debt a result of greater current liabilities or greater long-term debt?

Reference no: EM132581845

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