Archer, Maddie and Dillon have requested a meeting with you to discuss the potential investment in Sea
Archer, Maddie and Dillon have requested a meeting with you to discuss the potential investment in Sea Salt Surf Ltd. As part of your preparation for this meeting:
a. Prepare a one-page report on the profitability and efficiency of Sea Salt Surf Ltd. Use ratio analysis and comment on any significant changes in profitability and efficiency since 20X2. Ratio formulae is provided at Appendix A.
b. Consider the debt covenants associated with the funds borrowed by Sea Salt Surf Ltd. Undertake the necessary calculations to determine to what extent the company is meeting or breaching these covenants.
c. You notice that there has been a change in the accounting policy adopted by Sea Salt Surf Ltd which relates to the valuation of assets. With reference to your analysis of the company thus far, identify a potential reason for the change in accounting policy.
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