2 Answer ALL parts of this question a. (30 marks) Consider the following, unrelated events. For each one, set out their impact on the given ratios, all other things remaining constant. Your answer should be in the form of "increase", "decrease" or "no effect" and then you should give your reasons for this answer. (i) What is the effect of an increase in the share price on: Return on equity? Dividend yield? (ii) What is the effect of a one-off overstatement of this year's closing inventory on: - This year's current ratio? Next year's operating profit margin? (iii) What is the effect of an increase in dividend per share (DPS) on: Dividend yield (assume that PE ratio remains unchanged)? Dividend cover (assume that profit for year and number of ordinary shares in issue remain unchanged)? (iv) What is the effect of a bonus issue on: Return on equity? Earnings per share? (v) What is the effect of a revaluation of land and building on: - Return on shareholders' funds? Dividend pay-out? (4 marks each - Max: 20 marks) b. "The main purpose of ratio analysis is to compare the ratios of the company in question with those of comparable companies. But no two companies are exactly alike; therefore ratio analysis is a waste of time." Discuss this statement. Your discussion should include relevant examples. (10 marks) Total: 30 marks