Questions

Co. A

1. Low asset margin and high high assets turnoever are not significant
2. Liquidity ratio is least of the 3, ROI is highest

Co. B

1. Profit margin is better than Co. A
2. Asset turnover is lesser (0.9 < 5.34 , Co. A) because there is so much investment in manufacturing equipment etc.
3. Heavy investments in fixed assets (1094 > A > C)
4. Gearing Ratio is lower than company C

Co. C

1. Minimum investments in the fixed assets.
2. High profit margin. (Because its a high risk business, possibility of bad debts are much more in the case of finance companies than in case of steel or retail)
3. High investments in debtors
4. Liquidity ratio is the highest.

Lines of Defence in a Finance Company

15

1. What is the cash-conversion cycle for this firm?

$$2+2$$