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Advise gordon industries of the relationship

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Reference no: EM133190090

Question - Gordon Industries Ltd has provided you with the following information:

2019

2020

2021

Debt to Equity

10.5%

23.4%

36.2%

Gross Profit margin

30.2%

36.5%

35.3%

Net profit margin

19.5%

17.6%

13%

Return on Equity

15.1%

17.5%

16.2%

Asset Turnover  (times)

0.71

0.82

1.41

Return on Assets

13.8%

14.4%

18.3%

Interest coverage ratio

4 times

3 times

2.5 times

Required -

a) Advise Gordon Industries of the relationship between Return on Assets, Asset Turnover and Net Profit Margin. Comment on the profitability position of Gordon and any advice you consider relevant.

b) Advise the shareholders of Gordon Industries on the financial structure of the company.

Reference no: EM133190090

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