Write an essay on the following:
Financial reports are largely based on historical financial information and are therefore useful in assessing the accountability (stewardship) of management, but of little use to external decision-makers when it comes to allocating scarce resources.
Refer to the Financial Statements of the company listed below (as per workshop you are enrolled in) for the latest three years – 2020, 2019 and 2018 and complete the tasks (a) to (e) in maximum 1000 words and task (f) in maximum 1000 words. (Note: when you are using values/figure from company’s annual reports, use the updated/restated figures/values where available)
- What types of products or services do they sell?
- On what day of the year does its current financial year end?
- Are its financial statements audited by independent auditors? If so, by whom?
- For the most recent three years calculate and explain:
- Two Profitability ratios: Return on Assets and Net Profit Margin
- Two Efficiency ratios: Assets Turnover ratio and Assets Turnover period (days)
- Two Liquidity ratios: Current ratio and Acid Test ratio
- Two Financial gearing ratios: Debt ratio and Interest Coverage ratio
- Two Investment ratios: Dividend Per share and Earnings Per share
- Having calculated the above ratios, you now need to take into consideration the company’s corporate governance and ethical standards and provide advice to an investor who wishes to invest all his life savings in the company. (maximum 1000 words) (10 marks)
Note: calculate the ratio using the ratio formula uploaded under the assessment 3
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