Financial exercise‏

Beumont Ltd

Answer (a

Profitability Ratios

Return on Assets (Net Income Interest / Average Return on Equity Net Income / Average Equity 575 ,000 / [ (9 ,813 ,000 10 ,268 ,000 / 2] 0 .057

Efficiency Ratios Inventory Turnover Ratio Cost of goods sold / Average Inventory 7 ,637 ,000 / [ (2 ,386 ,000 3 ,420 ,000 / 2] 2 .63

Liquidity Ratios

Current Ratio Current Assets / Current Liabilities 7 ,700 ,000 5 ,174 ,000 1 .49

Quick Ratio (Cash Receivables / Current Liabilities 4 ,280 ,000 5 ,174 ,000 0 .83

Gearing Ratios p

Debt to Equity Ratio Long term debt / Equity 3 ,675 ,000 / 10 ,268 ,000 0 .36

19 ,117 ,000 0 .46

Answer (b

As per my understanding , Beumont has taken a positive step by attempting to expand its operations and grow . However , the short-term impacts of such a move could create a negative impact on the balance sheet , but there are obvious advantages and goals the firm can achieve in the long-run by following such a strategy . According to the information provided , the short-term financial health of Beumont has degraded , due to the rise in current liabilities , which is indicated by a decrease in the Working capital of the firm

However , for an asset , to start...