Reference no: EM132319147
ASSIGNMENT OVERVIEW
Part A of the Assignment aims to test sour ability to record accounting transactions using journals, adjust expense accounts for accruals and prepayments and prepare financial statements.
Part B tests your ability to carry out financial ratio analysis and provide recommendations of actions that the company can take to improve its performance. Your analysis should not exceed 1,000 words and should include appropriate explanation of the meaning of the ratios used and a trend analysis. Your recommendations should address profitability, liquidity and efficiency.
PART B
Nawal Ltd is a medical equipment manufacturing company last five ars are available for Nawal Ltd: operating in Muscat.
The following ratios for the
|
2018 |
2017 |
2016 |
2015 |
2014 |
| Profitablity ratios |
60 |
61 |
62 |
64 |
65 |
| Gross Profit Margin |
17 |
14 |
13 |
16 |
14 |
| ROCE |
9 |
7 |
6 |
8 |
6.5 |
| Sale growth |
11 |
9 |
6.5 |
9 |
|
| Liquidity Ratios |
2018 |
2017 |
2016 |
2015 |
2014 |
| Current Ratio |
1.98 |
3.6 |
3.4 |
3.68 |
3.26 |
| Quick Ratio/Acid Test Ratio |
1.35 |
2.87 |
2.7 |
2.75 |
2.45 |
|
Efficiency Ratios
|
2018
|
2017
|
2016 |
2015
|
2014
|
|
Asset Turnover
|
0.48 |
0.46
|
0.44 |
0.44
|
0.41
|
|
Inventory Turnover
|
3.3 |
3.1
|
2.8 |
2.2
|
2.3
|
|
Debtors Collection Period
|
60 |
63
|
68 |
70
|
73
|
|
Creditors Collection Period
|
78 |
88
|
102 |
105
|
111
|
Required:
Using the information provided above and any other data that you find appropriate.
The following ratios for the last five years are available for Nawal Ltd.
a) Analyse the profitablity of Nawal Ltd.
b) Analyse the liquidity of Nawal Ltd.
c) Analyse the Efficiency of Nawal Ltd.
d) Provide six recommendations to Nawal Ltd on how it Gill improve its performance.