Reference no: EM132531712
The person in charge of the finances of the company MGT, S.A. wants to know the company's situation concerning the industrial sector to which it belongs. For this, it has the following information regarding the industry:
a) General liquidity ratio is 1.55; the acid test is 1.20, and the ratio between the available and the current liabilities is 0.95.
b) The debt ratio stands at 1.25. The margin on sales is 21%. The investment rotation is 1.45 times.
c) Economic profitability is around 23%, and financial profitability is 29%
The data referred to the company (in thousands of €) are the following:
Assets
- Non-current asset (net) 170
- Stocks of finished
products 45
Clients 65
Banks 70
Total Assets 350
Liability and Net Equity
-Equity 125
-Reservations 25
-External Resources 105
-Loans 65
-Supplier 30 Total Net Equity 350
In addition, it is known that:
· Sales are € 250,000 and its direct cost of € 105,000.
· Amortization of € 70,000.
· Long-term debt generates interest at 5%, short-term bank loans at 7%, and the departure of suppliers does not accrue any interest.
· The Corporation Tax is 25%.
Calculate the liquidity, acid test and debt ratios, and compare them with the sector data. It also calculates the economic and financial returns, and the margin on sales and investment rotation, even making a comparison between the company and sector.