langara collage Analyzing HomeStar Ltd.’s Financial Performance

(Analysis using selected ratios) HomeStar Ltd. is a chain of retail hardware
stores with total assets of $2.5 billion. Selected financial ratios for HomeStar
are as follows:
2024
2023
2022
Current ratio
2.35
2.38
2.39
Quick ratio
0.56
0.51
0.58
Inventory turnover
5.57
5.33
5.27
Debt to equity ratio
0.68
0.87
0.86
Return on assets
7.3%
9.0%
9.8%
Gross margin
7.71%
8.36%
8.73%
Profit margin
3.28%
3.87%
4.19%
Return on equity
11.4%
15.1%
16.8%
In 2022, HomeStar was affected by a decline in the demand for home
hardware items and the entry of a major U.S. chain into the market.
Required
1. Briefly discuss what these financial ratios indicate about how HomeStar
was affected by the events of 2022.
2. Which measures have deteriorated during the subsequent periods?
3. Which ratios indicate positive action taken by HomeStar during the
subsequent periods?