Assess Jack's opinion on the working capital management of KAT Ltd and KIT Ltd using financial indicators.

4.1.1
Liquidity

4.1.2
Risk / Gearing

4.1.3
Profitability

4.1.4
Return

4.1.5
Solvency

4.2.1
Jack's opinion is supported by the following financial indicators:

1. Acid-test ratio: This ratio measures a company's ability to pay off its current liabilities without relying on the sale of inventory.

   • KAT Ltd has an acid-test ratio of $\boxed{1.5 : 1}$, while KIT Ltd has a ratio of $\boxed{0.3 : 1}$.
   • KAT Ltd's significantly higher acid-test ratio indicates that it has more liquid assets (excluding inventory) to cover its short-term debts, suggesting a much better liquidity position. KIT Ltd's ratio of 0.3:1 is very low, indicating a high reliance on inventory to meet short-term obligations, which is a risk.

2. Period for which stock is on hand: This indicator measures the average number of days inventory is held before being sold. A shorter period indicates more efficient inventory management.

   • KAT Ltd holds stock for $\boxed{86 \text{ days}}$, whereas KIT Ltd holds stock for $\boxed{150 \text{ days}}$.
   • KAT Ltd's shorter stock holding period shows that it is selling its inventory much faster than KIT Ltd, which is a sign of more effective working capital management.

3. Average debtors' collection period: This ratio measures the average number of days it takes for a company to collect payments from its credit customers. A shorter collection period indicates more efficient management of accounts receivable.

   • KAT Ltd collects its debtors in $\boxed{25 \text{ days}}$, while KIT Ltd takes $\boxed{53 \text{ days}}$.
   • KAT Ltd's significantly shorter collection period means it converts its credit sales into cash much faster than KIT Ltd, demonstrating more effective management of its working capital and improving its cash flow.