Milton Ltd is a young company focusing on software development and retailing. It has experienced several successful years in the past and has realised a stable growth in its earnings. You are required to provide a financial ratio analysis to identify the potential strengths and weaknesses of Milton as compared to the other peer companies. Based on the publicly available information, you have projected the 2023 industry financial statements (Appendix A) and will use them to calculate the benchmark ratios for the ratio analysis.

1. the report to analyse the projected financial performance of Milton in 2023. Use

the information in Appendix A to calculate the benchmark ratios. In this report you are

required to

? Introduce the objective of the report and briefly introduce the procedure that you follow

to model the financial statements;

? Comment on the projected financial performance of Milton in 2023 in liquidity,

profitability, operational efficiency and long-term solvency as compared to the industry

benchmark ratios. Identify the relative strengths and weaknesses of Milton based on your

analysis results.

? Recommend strategies for Milton to outperform the industry average in 2023.

? Critique the assumptions used in modeling, are they perfectly realistic or would you

recommend some changes to improve the quality of the projection?

? Use tables or charts to support your analysis. In your report, please do not display any

ratio formula, do not attach a whole set of financial statements, do not describe how you

calculate the financial ratios and do not dump all the information in a single table, your

objective is to explain the analysis results logically and clearly with an appropriate usage

of data.

Appendix A Industry Projected Income Statement for the period ended 30 June 2023 Sales revenue 2,144,153.03 Cost of sales (1,001,973.99) Gross Profit 1,142,179.04 Wages and salaries (387,989.60) Rental expenses (140,400.00) Depreciation - Equipment (234.517.33) Operating Profit 379,272.12 Interest Expense (15,000.00) Income tax expense (109,281.64) Net Profit 254,990.48 Dividend (76,497.14) Transferred to retained earnings 178,493.34Industry Projected Balance Sheet as at 30 June 2023 ASSETS Cash at bank 52,457.75 Accounts receivable 146,006.61 Inventory 365,032.89 Prepaid rental expenses 88.200.00 Equipment 2,706,533.86 Accumulated depreciation - equipment (1,539,994.82) Patent 75,000.00 Total Assets 1.893.236.29 LIABILITIES AND EQUITY Accounts payable 202,219.92 Wages and salary payable 122,523.03 Bank loan 140,000.00 Share capital 450,000.00 Retained earnings 978.493.34 Total Liabilities and Equity 1.893.236.29