The following ratio information about Quality pic for the year ended 31 December2014 has been provided...

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The following ratio information about Quality pic for the year ended 31 December2014 has been provided to you along with the sector average ratios: Quality Sector average 12% 16.8% Return on capital employed Net asset turnover Operating margin 1.6 1.4 7.5% 12% Gearing (based on market value) see below 38% Quality's equity liabilities can be summarised as follows: Equity Ordinary £1 shares Reserves 5% Loan notes 14 At 31 December 2014, the market value of 1 Quality share is £2.50 and the value of each £100 bond is £105. Required: a) Calculate the gearing ratio for Quartile. b) Assess the position of Quartile in comparison to the sector averages for the ratios provided above. c) Discuss the limitations of ratio analysis. 血 15 12 Em The following ratio information about Quality pic for the year ended 31 December2014 has been provided to you along with the sector average ratios: Quality Sector average 12% 16.8% Return on capital employed Net asset turnover Operating margin 1.6 1.4 7.5% 12% Gearing (based on market value) see below 38% Quality's equity liabilities can be summarised as follows: Equity Ordinary £1 shares Reserves 5% Loan notes 14 At 31 December 2014, the market value of 1 Quality share is £2.50 and the value of each £100 bond is £105. Required: a) Calculate the gearing ratio for Quartile. b) Assess the position of Quartile in comparison to the sector averages for the ratios provided above. c) Discuss the limitations of ratio analysis. 血 15 12 Em

Answer rating: 100% (QA)

a Gearing Ratio can be calculated as Interest bearing long term debt Common shareholders funds x 100 In the given data Common shareholders funds Ordin... View the full answer