Reference no: EM133164620
Investinus plc
Statement of Financial Position (Balance Sheet)
Scenario:
• Investinus plc is a manufacturing company which has been steadily growing for the past decade.
• During the year 20x2, in the face of increasing competition, it invested heavily in a new warehouse and factory machinery, allowing it to produce more items more quickly.
• To fund this, it issued a small amount of share capital, and took out a loan with a high street bank. It rationalised its accounting team and made excess staff redundant.
• The Directors are very pleased with the increased sales and profits, and higher levels of assets which have resulted.
Required:By calculating and analysing financial ratios, what conclusion would you draw on the financial health of the company? Would you recommend investing in it?
Activity -Ratio calculation and interpretation
Profitability Margin ratios
Using the income statement and SOFP (Balance sheet) of Investinus plc
Calculate and comment on:
3 Margin Ratios - Gross, Operating and Net. Show your workings for 20x2.
Is each year on year‘change' a good or bad thing?
What could be a potential cause of each movement?
Profitability Return ratios:
Using the income statement and SOFP (Balance sheet) of Investinus plc
Calculate and comment on theReturn Ratio -ROCE. Show your workings.
Is each year on year ‘change' a good or bad thing?
What could be a potential cause of each movement?
Liquidity ratios:
Using the income statement and SOFP (Balance sheet) of Investinus
Calculate and comment on:Liquidity ratios. Show your workings.
Is each year on year ‘change' a good or bad thing?
What could be a potential cause of each movement?
Solvency ratios:
Using the income statement and SOFP (Balance sheet) of Investinus
Calculate and comment on:Solvency ratios. Show your workings.
Is each year on year ‘change' a good or bad thing?
What could be a potential cause of each movement?
Efficiency ratios- Efficiency ratios& Operating cash cycle
Using the income statement and SOFP (earlier in this booklet) of Investinus
Calculate and comment on the following efficiency measures. Show your workings:
Is each year on year ‘change' a good or bad thing?
What could be a potential cause of each movement?
Overall: Would you recommend investing in this company? Give your reasons.
Attachment:- ratio analysis template.rar
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