Fritwell has an asset turnover of 2.0 and an operating profit margin of 10%. It is launching a new product which is expected to generate additional sales of USD1.6 million and additional profit of USD120,000. It will require additional assets of USD500,000.Assuming there are no other changes to current operations, how will the new product affect these ratios?
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A 1 and 2 B 3 and 2 C All three statements are correct D None of the statements are correct
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A 1 and 2 only B 3 and 2 only C 2, 3 and 4 only D 4 only
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A ROCE:Decrease; Gearing:Increase B ROCE:Decrease; Gearing:Increase C ROCE:Increase; Gearing:Decrease D ROCE:Increase; Gearing:Increase
5 .A company has a current ratio of 1.5, a quick ratio of 0.4 and a positive cash balance. If it purchases inventory on credit, what is the effect on these ratios?
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