Duncan plc operates a mobile phone network for personal and business customers. The latest annual report has just been released on the company's website. The annual report includes the following: Duncan plc - Extract from the Financial Review for the year ended 31 December 2011. Highlights for the year: A review of operating and administrative systems resulted in investment in non-current assets with a significant reduction in staffing levels. Growth has been offset by competitive pricing due to strong competition. Average revenue per personal customer per month (2011= 10.56, 2010= 11.20) has been affected by increased regulatory pressures on the pricing of mobile phone tariffs. Customers registered during 2011 have increased by 7% (2010: 3%). 10 million has been spent in 2011 on new advertising and sports sponsorship to boost brand awareness. Duncan plc Income Statement for the year ended 31 December 2011 Revenue Cost of sales Gross profit Selling and distribution costs Administrative expenses 2011 m 2,695 (1,295) 1,400 (190) (150) 2010 m 2,610 (1,495) 1.115 (215) (145) Profit from operations Finance costs Profit before taxation Tax Profit for the year 1,060 (75) 985 (395) 590 755 (80) 675 (230) 445 Duncan plc - Statement of Financial Position at 31 December 2011 2011 m 2010 m m m ASSETS Non-current assets Property, plant and equipment Intangibles 2,500 4,615 7,115 1,530 5,390 6,920 Current assets Inventories Trade receivables Cash and cash equivalents 15 460 620 95 450 190 1,095 8,210 735 7,655 Total assets EQUITY & LIABILITIES Equity Issued capital - 50p ordinary shares Share premium Other reserves Retained earnings Equity Non-current liabilities Borrowings 1,335 2,600 270 1,015 5,220 1,330 2,590 235 790 4,945 2,080 2,050 Current liabilities Trade payables Taxation and other liabilities 565 345 350 310 660 910 8,210 Total equity and liabilities 7,655 Required: (a) Compute the following accounting ratios (to one place of decimals) for Duncan plc for 2010 and 2011. . . . . Return on Capital Employed Net profit margin Asset Turnover ratio Gross profit margin Current Ratio Quick Ratio Gearing (Debt to Capital Employed) Earnings per share PE Ratio (Assume relevant share prices for 2011 of 3.09 and for 2010 of 2.00) (12 marks) . . . . (b) Evaluate, using the ratios calculated above and the other information provided, the financial performance and financial position of Duncan plc. (13 marks)