SeaSwift plc builds luxury yachts for the international market. The most recently published income statement and statement of financial position are set out below. Since the business builds the yachts specifically to customers’ requirements, it carries no inventories of finished yachts.

A dividend totalling £20 million was paid on ordinary shares for the year.

SeaSwift plc’s ordinary shares had a market value of £5.10 each on 31 December 2018.

Following the publication of the 2017 financial statements, SeaSwift plc’s finance director carried out a ratio analysis of the business’s financial performance and position and derived the following ratios:

Required:

Calculate the same ratios for 2018 as are given above for 2017 then go on to discuss changes that have taken place over the two years. Note that the 2017 ratios were calculated using the 2017 statement of financial position figures, where relevant, rather than an average. This means that to enable a valid comparison the 2018 ratios need to be calculated using the 2018 year-end figures.

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Income statement for the year ended 31 December 2018 £ million 837 Revenue Cost of sales (including raw materials inventories usage £253 million) (Note: Raw material purchases totalled £255 million) Gross profit Operating costs Operating profit Interest payable Profit before taxation Taxation Profit for the year (478) 359 (224) 135 (30) 105 (27) 78