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Footscray Foods has expanded its operations over the past year. As their business consultant, you have been asked to advise on whether this decision was

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Footscray Foods has expanded its operations over the past year. As their business consultant, you have been asked to advise on whether this decision was successful. Management has provided you with the following details:- 2020 2019 $ Extract from Income Statement Sales 90000 120,000 Cost of Goods Sold 45,000 56,000 Interest Expense 3,000 4,000 Profit Before Tax 27,000 30,000 Income Tax Expense 8,100 9,000 Extract from Balance Sheet Current assets 60,000 50,000 Non-current assets 120,000 160,000 Current liability 25,000 50,000 Non-current liability 72,000 78,000 Required 1. Calculate the following ratios for 2019 and 2020: Net profit after tax/Equity Net Profit After Tax / Sales Current assets/Current liability Total Liabilities / Total Assets EBIT / Interest Expense Required 1. Calculate the following ratios for 2019 and 2020: Net profit after tax/Equity Net Profit After Tax / Sales Current assets/Current liability Total Liabilities / Total Assets EBIT / Interest Expense 2. Using the above ratios, write a brief report on the changes in Footscray Foods's Profitability, Liquidity and Stability. Identify and explain any problems that management should be aware of. 3. If shares are seen to be too risky, what other investment options are available to increase your wealth? Identify and explain 2 other investment options. Provide 1 advantage and 1 disadvantage associated with each option. (5 + 11 + 4 = 20 marks )

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