For questions 3 and 4:

use the following information sourced from McRobert (2009, p.15) "ABC Learning Centres Limited did the annual reports give enough warning?"

QUESTION 3

Identify and discuss some of the business and accounting 'red flags' which should have warned financial analysts and investors of the increasing risk of investing in ABC Learning Centres Limited.

(10 Marks)

QUESTION 4

Explain the importance of financial ratio analysis, including the importance or relevance of different ratio categories. Are some ratio categories more important than others, and if so, why? (Use the ABC Learning information above and the ratios provided at the back of this exam to support your conclusions).

(10 Marks)