Define solvency, risk/gearing, profitability, return, and liquidity. Explain what financial indicators are needed to compare working capital management, liquidity, and dividend policies of two compani

4.1.1
A company with total assets exceeding total liabilities is solvent.

4.1.2
A company that relies heavily on loans will have high risk/gearing.

4.1.3
A company that controls its income and expenses properly will be profitable.

4.1.4
The percentage net income on equity indicates the return earned by shareholders.

4.1.5
A company that is able to settle its immediate debts is liquid.

4.2.1
To explain and support Jack's opinion regarding KAT Ltd's working capital management and liquidity compared to KIT Ltd, I would need specific financial indicators for both companies, such as:

• Current Ratio
• Acid-Test Ratio
• Stock Turnover Rate (or Inventory Days)
• Debtors Collection Period (or Debtor Days)
• Creditors Payment Period (or Creditor Days)

Without these figures, I cannot provide a detailed comparison or support Jack's opinion with specific data.

4.2.4
To compare and comment on the dividends pay-out policies of both companies, I would need specific financial indicators for KIT Ltd and KAT Ltd, such as:

• Dividends per share (DPS)
• Earnings per share (EPS)
• Dividend Payout Ratio (DPS/EPS)

Without these figures, I cannot provide a detailed comparison or comment on their dividend policies.