As a consequence of COVID-19, many businesses have assets that are currently not being utilized or are underutilized. When reviewing their business strategy, companies will need to consider the utilization of the assets on the companies performance and position. Secondly, the significant downturn of economic activity and uncertainty of recovery will cause investors to increase the focus on the liquidity situation of a company. This might even be true for companies for which liquidity was not a significant risk in the recent past. Analysing financial statement information is one of the important elements in the investment decision making process. Financial ratio analysis helps an investor to work with these numbers in an organized and simplified manner. Select a company you are familiar with or any public listed company in which you can easily obtain the latest annual report. Required:

(a) From the annual reports, calculate the following ratios for the latest 2 years of the company you have selected: (i) Asset turnover. (ii) Return on total assets (ROA). (iii) Debt ratio.

Analyse the computed ratios over the two years and discuss the performance and position of the company. Evaluate from the investors perspective, the attractiveness of the company. The financial statements must be as current as possible and the relevant section of the financial statements should be included in the appendix. Do not insert the whole annual report in the appendix. Workings for the computation of the ratios should be clearly illustrated. If you need to make assumptions, they must be clearly stated.

(b) Analyse the latest annual report of your chosen company and any related sources and evaluate the impact of the pandemic on the companys liquidity. Recommend ways in which the company can manage the liquidity risk.