Before you start analysing the firm's financial statements, you will need to obtain industry averages for each of the standard financial statement ratios. They are provided below.

	2019	2020	2021	Industry Averages
Profitability Ratios
Return on equity	21.3%	21.2%	19.6%	22.0%
Return on Capital employed	12.9%	13.5%	13.5%	12.8%
Operating Profit Margin	14.7%	18.2%	23.0%	14.4%
Gross Profit Margin	54.7%	52.0%	49.3%	44.8%
Efficiency Ratios
Average Inventory Turnover period	79.8	83.3	93.0	78.8
Average settlement period for Accounts Receivable	28.0	27.0	28.4	30.0
Average settlement period for Accounts Payable	39.9	48.8	62.4	37.3
Sales Revenue to Capital Employed	87.3%	74.2%	59.0%	87.0%
Liquidity Ratios
Current Ratio	2.82	2.88	2.95	4.60
Acid Test Ratio	2.03	2.14	2.25	2.76
Leverage Ratios
Gearing Ratio	61.7%	58.5%	55.2%	61.4%
Interest Cover Ratio	3.94	4.38	4.65	5.75
Investment Ratios
Dividend Payout Ratio	67.8%	59.9%	57.1%	40.8%
Dividend Yield	6.61%	6.01%	5.08%	4.70%
Earnings Per Share	$0.19	$0.21	$0.20	$0.28
P/E Ratio	10.4	9.8	11.5	11.2

1) Analyse the firm's performance over the last 3 years. You should pay attention to all the 16 ratios shown above. Identify any strengths or weakness, in terms of positive or negative trends. a. Profitability Ratios b. Efficiency Ratios c. Liquidity Ratios d. Leverage Ratios e. Investment Ratios 2) Analyse the firm's performance in comparison to Industry averages for each of the ratios. Identify any strengths or weaknesses. a. Profitability Ratios b. Efficiency Ratios c. Liquidity Ratios d. Leverage Ratios e. Investment Ratios

3) Summarise the firm's performance in terms of profitability, efficiency, liquidity, leverage & potential for investment.

4) Briefly explain to the client any possible problems with your analysis that client should bear in mind. For example, are there any conclusions you have come to that might be unreliable because of the nature of this analysis, and if so, why?