Following your finalization of the preparation of Financial Statements of ABC PLC for the financial year ended 31 December 2021, you also have a task to undertake an analysis of these financial statements.  Below are the 10 financial ratios ABC PLC considers critical in the interpretation of financial statements.  The average financial ratios for the industry are also indicated after each respective ratio.

1.  Current Ratio. Industry ratio is 0 times
2. Quick Ratio. Industry ratio is 0.75 times
3. Cash Ratio. Industry ratio is 0.35 times
4. Asset Turnover Ratio. Industry ratio is 0.5 times
5. Debt to Equity Ratio. Industry ratio is 1.25 times
6. Gross Profit Margin Ratio. Industry ratio is 50%
7. Net Profit Margin Ratio. Industry ratio is 25%
8. Return on Assets. Industry ratio is 15%
9. Return on Capital Employed. Industry ratio is 10%
10. Return on Equity Ratio. Industry ratio is 20%

REQUIRED

1. Calculate each of the ratios listed above.
2. Explain your understanding of each of the above listed ratios on the operations of the company.
3. Indicate how ABC PLC’s performance compares with other companies in the same industry.

 

Answer rating: 100% (QA)

ANSWER To calculate each of the listed financial ratios for ABC PLC for the financial year ended December 31 2021 and provide an understanding of thei... View the full answer