Financial ratios.

1. September Inc.’s selected financial ratios are as follows:

20X1 20X2 20X3

Current ratio 4.2 2.6 1.8
Acid-test ratio 2.1 1.0 0.6
Debt-to-total-assets 23% 33% 47%
Inventory turnover 8.7× 5.4× 3.5×
Average collection period 33 days 36 days 49 days
Total asset turnover 3.2× 2.6× 1.9×
Net profit margin 3.8% 2.5% 1.4%
Return on investment (ROI) 12.1% 6.5% 2.8%
Return on equity (ROE) 15.7% 9.7% 5.4%

a) What contributed to the decline in the return on investment? 5 pts

b) Did the debt increase because of infusing more current liabilities or more non-current debt? Explain your answer. 5 pts

Basil has invested R16 497 000 in a family restaurant and he wants total sales revenue of 10% on his investment in the year to come.The restaurant has 100 seats and serves lunch and dinner 6 days a week for 52 weeks a year.From past experience Basil has learnt that lunch can be estimated at 40% of total sales revenue with a seat turnover of 1.25, while dinner is estimated at 60% of total sales revenue with a 0.75 seat turnover.REQUIRED:2.1 Calculate the average cheque for the restaurant in the coming year. (5)
2.2 Calculate the average dinner cheque for the restaurant in the coming year. (5)