The Senior Accounting Assistant of Beacon Ltd has calculated the ratios in the table below from 2
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Question:
The Senior Accounting Assistant of Beacon Ltd has calculated the ratios in the table below
from financial statement. He has also ascertained comparable ratios from the companys
main competitor Excellence Ltd for the same period.
Ratios Beacon Ltd Excellence
Gross Profit Margin
Current ratio ::
DebtEquity ratio
Debtors collection period, days days
Quick ratio ::
Creditors payment period days days
Net Profit Margin
Interest cover times times
Required:
a As the accountant of the company, write a comprehensive report to management regarding
the performance of the company. In your report, group the ratios under their main types
eg Profitability interpret them, comment on performance and suggest ways for
improvement.
b Briefly explain the drawbacksdemerit of ratio analysis.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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