Rozelle Ltd and Balmain Ltd have provided the following information, which relates to the year ended 30
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Question:
Rozelle Ltd and Balmain Ltd have provided the following information, which relates to the year ended 30 June 2020.
Rozelle Ltd | Balmain Ltd | Industry Average | |
Current ratio | 1.03:1 | 1.91:1 | 1.65:1 |
Quick ratio | 0.77:1 | 1.09:1 | 0.95:1 |
Times interest earned ratio | 3.1 times | 5.9 times | 5.3 times |
Debt to asset ratio | 101.4% | 70.2% | 75.3% |
Return on shareholders’ equity | 17.22% | 11.52% | 14.85% |
Return on assets | 18.10% | 12.31% | 15% |
Inventory turnover (days) | 65 days | 55 days | 60 days |
Receivable turnover (days) | 78 days | 48 days | 47 days |
Required:
Using the above information evaluate each company’s profitability, liquidity and solvency. Your discussion should compare both companies to each other and to the industry average.
Expert Answer:
Profitability A companys profitability is determined by the returns it generates on its invested capital as measured by the following ratios 1 Return ... View the full answer
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