Avoca Ltd is a major retailer selling fishing rods and reels on the Central Coast of NSW.
Question:
Avoca Ltd is a major retailer selling fishing rods and reels on the Central Coast of NSW. The following ratios are provided by management to assess the performance of the business over the last two years.
Year Ending June 2021 | Year Ending June 2022 | |
Debt/asset ratio | 55.6% | 75.2% |
Current ratio | 2.0:1 | 1.2:1 |
Return on assets | 10.0% | 15.3% |
Profit Margin | 6.5% | 11.5% |
Required:
a) Using the information above discuss how the liquidity, solvency and profitability of Avova Ltd has changed from 2021 to 2022.Which ratio(s) would be used to evaluate each category of performance and what the change in performance indicates about the business.(6 marks)
b) Provide two (2) recommendations to Avoca Ltd regarding how the company could improve its solvency in 2023. (2 marks)
Statistics The Exploration & Analysis Of Data
ISBN: 9780840058010
7th Edition
Authors: Roxy Peck, Jay L. Devore