Reference no: EM132945204

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:

• 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.
• The debt ratio stands at 1.25. The margin on sales is 21%. The investment rotation is 1.45 times.
• Economic profitability is around 23%, and financial profitability is 29%

The data referred to the company (in thousands of €) are the following:

Assets                                                    Liability and Net Equity
Non-current asset (net) 170                Equity 125
Stocks of finished products 45               Reservations 25
Clients 65                                          External Resources 105
Banks 70                                               Loans 65
Supplier 30

Total Assets 350                                    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%.

Problem 1: 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.