2002 2003 2004 2006 2007 43 94 327 1257 7 For questions 3 and 4: use the following information sourced from McRobert (2009, p.15) "ABC Learning Centres Limited - did the annual reports give enough warning?" TABLE 1: ABC Learning Centres Limited, kuy financial data, as at 30 June Year ended 2001 2005 # of centres at year end 187 660 2238 of directors 7 Total assets AS m.) 28.5 55.9 157.0 1,165.5 2,323.3 4,067.1 Total debt 10.3 20.6 55.6 103.0 200.1 1,758.8 Total shareholders' funds 13.2 27.4 89.1 1,837.7 1,901.6 Prolit after tax 3.3 6.8 21.4 523 81.0 143.1 Return on equity 24.7% 24.9% 13.5% 10.5% 6.2% 7.5% Before the diserta discussed below 4 5 6 6 7 314.1 260.4 202.6 845.5 12.1 4.4% 2005 TABLE 2: ABC Learning Centres Limited, returns to shareholders, as at 30 June For year ended: 2001 2002 2003 2004 Net profit after tax/total revenue 25,6% 28.9% 29.8% 26.6% ROE (adjusted) 24.7% 24.9% 13.5% 14.1% 21.0% 6.6% 2006 13.3% 4.4% 2007 8.6% 7.5% QUESTION 3 Identify and discuss some of the business and accounting 'red flags' which should have warned financial analysts and investors of the increasing risk of investing in ABC Learning Centres Limited (10 Marks) QUESTION 4 Explain the importance of financial ratio analysis, including the importance or relevance of different ratio categories. Are some ratio categories more important than others, and if so, why? (Use the ABC Learning information above and the ratios provided at the back of this exam to support your conclusions). (10 Marks)