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Explain what the ratios mean in general and comment specifically on what they tell about the Company

• Explain what the ratios mean in general and comment specifically on what they tell about the Company’s performance. • Examine how the ratios are trending and comment/explain if the trend is favourable or not. Offer suggestions why a change in the ratio may have occurred by looking at how its components change in relation to each other. D) ASSET EFFICIENCY (7 marks. Approximately 200 words) Calculate the Company’s ratios below based on what you were taught. 2015 2014 Asset Turnover Ratio Total Revenue / Average Assets (times) Days Inventory (Average Inventory / Cost of Goods Sold) x 365 (days) Days Debtors (Average Debtors/ Sales Revenue) x 365 (days) • Explain what each ratio measures in general, and comment on how efficient Fantastic Holdings was. • Examine how the ratios are trending and comment/explain if the trend is favourable or not. Offer suggestions why a change in the ratio may have occurred by looking at how its components change in relation to each other. . E) LIQUIDITY (7 marks. Approximately 200 words) Calculate Current Ratio and Quick Asset Ratio for the years 2015 and 2014. Show it in a table as in the previous sections and comment on the Company’s liquidity position. (F) CAPITAL STRUCTURE (7 marks. Approximately 200 words) Calculate the following ratios (1) Debt/Equity ratio, (2) Debt ratio (3) Equity ratio. Show it in a table similar to the previous sections and comment on the Company’s capital structure. Below are the ratios of rival companies Joyce Corporation Ltd and Fantastic Holdings Ltd. Use this information in your comments about the Company’s capital structure. Joyce Corporation Ltd Nick Scali Ltd 2015 2014 2015 2014 Debt Equity Ratio (TL/TE) 73.2% 61.1% Debt Equity Ratio (TL/TE) 108.4% 100.4% Gearing/Debt Ratio (TL/TA) 42.3% 37.9% Gearing/Debt Ratio (TL/TA) 52% 50.1% Equity Ratio (TE/TA) 57.7% 62.1% Equity Ratio (TE/TA) 48% 49.9% (G) Interest Servicing ratio (Interest Cover) (2 marks. No more than 50 words) Calculate and comment on the Company’s Interest Servicing Ratio for 2015 and 2014. (H) Cash Flow (2 marks. No more than 50 words) Examine the Company’s Statement of Cash Flow and answer the following short answer questions: (a) What are the names of the three sections that show the Company’s net cash flows? (b) Which section shows the strongest net cash inflow for the Company? (c) Is it a worry if the Net Cash Flows from Investing Activities is negative? (I) Market Performance (4 marks. Approximately 100 words) From http://au.finance.yahoo.com or elsewhere, obtain the Company’s share prices on 30 June 2015 and 2014. Using these market prices and the Earnings per Share (EPS) for the Company shown in Note 7 of its 2015 annual report, calculate the company’s Price Earnings ratio (P/E ratio). What does the Company’s P/E ratio indicate compared to the P/E ratios of competitors as shown below? P/E ratio of Joyce Corporation Ltd P/E ratio of Nick Scali Ltd 2015 6.7 times 16.1 times

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