The following five-year summary relates to Wandafood Products plc and is based on financial statements prepared under the historical cost convention:

738 • Interpretation Financial ratios 20X9 20X8 20X7 20X6 20X5 Profitability Trading profit Margin Sales

% 7.8 7.5 7.0 7.2 7.3 Trading profit Return on assets Net operating assets

% 16.3 17.6 16.2 18.2 18.3 Interest and dividend cover Trading profit Interest cover Net finance charges times 2.9 4.8 5.1 6.5 3.6 Earnings per ordinar y share Dividend cover Dividend per ordinar y share times 2.7 2.6 2.1 2.5 3.1

Net operating assets include tangible fixed assets, stock, debtors and creditors. They exclude borrowings, taxation and dividends.
Required:
Prepare a report on the company, clearly interpreting and evaluating the information given.
(ACCA)

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Debt-equity ratios Net borrowings % 65.9 61.3 48.3 10.8 36.5 Shareholders' funds Net borrowings % 59.3 55.5 44.0 10.1 33.9 Shareholders' funds plus minority interests 20X9 20X8 20X7 20X6 20X5 Liquidity ratios Current assets less stock Quick ratio % 74.3 73.3 78.8 113.8 93.4 Current liabilities Current assets Current ratio % 133.6 130.3 142.2 178.9 174.7 Current liabilities Asset ratios Operating asset Sales times 2.1 2.4 2.3 2.5 2.5 turnover Net operating assets Working capital turnover Sales Working capital times 8.6 8.0 7.0 7.4 6.2 Per share Earnings per - pre-tax basis share - net basis Dividends per share Net assets per share P 23.62 21.25 17.96 17.72 15.06 P 15.65 13.60 10.98 11.32 12.18 P 5.90 5.40 4.90 4.60 4.10 P 102.1 89.22 85.95 85.79 78.11