Case 2 (20 points) (Round to the nearest % or $)

Star operates in technology industry. The company evaluates its position in the market in order to improve certain indicators through innovation. Shown below is the industry average.

ROCE	28.1%
Operating profit margin	7.5%
Net asset turnover	0.9 times
Current ratio	1.5:1
Gearing	38%

Statement of Financial Position at 31 December 2020

	2020, $m	2019, $m
Non-current assets
Property, plant and equipment	680	675
Goodwill	150	150
	830	825
Current assets
Inventories	97	96
Trade receivables	62	63
Cash	96	62
	255	221
Total assets	1,085	1,046
Equity
Share capital	200	200
Retained earnings	201	176
	401	376
Non-current liabilities
Borrowings	192	190
Deferred tax	75	71
	267	261
Current liabilities
Trade and other payables	347	323
Short-term borrowings	70	86
	417	409
	1,085	1,046

Other extracts from financial statements for the years ended 31 December

	2020, $'m	2019, $'m
Revenue	1,040	1,035
Profit from operations	55	40
Finance costs	13	12
Cash generated from operations	126	125

Extracts of changes in equity	2020, $'m	2019, $'m
Retained earnings1 January	376	361
Net profit for the year	30	19
Dividends	5	4
Retained earnings 31 December	401	376

REQUIRED

a) Calculate relevant ratios for the years ended 31 December 2020 and 2019 (10 points)

b) Comment on the performance and position of Star for the year ended 31 December 2020 and 2019 based on a comparison with industry average (10 points)