Nicola is thinking of investing in a limited company called Tresven. She seeks your help to calculate and interpret some ratios so as to assist her with the decision. Summarised financial statements of Tresven are shown.

Additional information:

(i) Dividend paid in the year is $10 million.

(ii) Market price of Tresven share 150c.

(iii) Tresven’s major competitor is Hilday the ratios for which have been calculated as shown.

Required:

(a) Calculate for Tresven the ratios which have been calculated for Hilday.

(b) Comment on Tresven’s ratios.

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Statement of income year ended 31.10.2012 Sales revenue Cost of sales Gross profit Expenses Operating profit Finance costs Profit before tax Income tax Net profit $'000 23,420 (8,245) 15,175 (2,460) 12,715 (50) 12,665 (1,515) 11,150