JUS Question 4. To assist the financial director of a medium sized enterprise, you have been asked to draft some financial ratios. It concerns the ratios accumulated in Table 1, shown below. Table 1. Ratios with corresponding standard values of the enterprise. Ratio for Standard value Liquidity Current ratio Net working capital 1,5 No data Solvency Debt ratio 0,43 Profitability Profit margin ratio Return on Equity Return on Assets 15,0% 23,1% 8,5% A On basis of last year's Balance sheet and Profit and Loss account, shown in Table 2 and 3, calculate the outcomes for the key figures liquidity, solvency and profitability. Show the calculations and the outcomes for these key figures on the answer sheet. (20 points) B For each key figure, compare the calculated outcome with the standard value and give a plausible explanation for the fact that the values realised for the key figures are the same, better or worse than the standard value. If possible, use the data from the Balance sheet and Profit and Loss account for your explanation. (10 points) Table 2. Balance sheet as of December 31 2018 and 2019 (amounts x 1.000) 2018 2019 2018 2019 Machines Furniture Inventory Accounts receivable Cash Total Assets 130 100 80 200 10 520 200 Equity 300 Retained profit 50 Bank loan for 5 years 300 Current liabilities 20 870 Total Liabilities 100 50 200 170 100 300 180 290 520 870 Table 3. Profit&loss account for the year 2018 (x 1.000) Net Sales 16,000 Cost of goods sold Salaries Depreciation Other operating expenses 10,000 4.950 200 1500 Operational profit Interest expenses Profit before Tax (15.650 350 650 300