PART 1 (50%) The following are extracts of the Income Statement and Balance Sheet of Shimen Ltd. 2020 (000) 2021 (000) Non-current Asset Vehicle 20.00 18.00 Furniture 8.00 5.00 28.00 23.00 Current Assets Inventory 4.90 13.70 Receivable 8.80 11.60 Balance at Bank 13.90 11.50 Cash In hand 2.60 4.20 Total current asset 30.20 41.00 Current Liabilities 16.70 30.80 41.50 33.20 Shareholders' equity 20.00 20.00 Retained Profit 16.00 12.50 General reserve 5.50 0.70 41.50 33.20 Sales 30.00 40.00 Cost of Sales 8.00 9.00 Net Profit 16.00 18.50 Investors Ratios: Dividend Per Share 12 Pence 18 Pence 20,000 units 20,000 units Number of Shares Issued Average share price 2.50 3.30 The following ratios indicates the benchmark performance of the industry average for the year 2021: Ratios Measures Gross Profit Margin Net Profit Margin Receivable Collection Period Earning Per Share Dividend Yield 65 percent 55 percent 68 days 50 pence 3.2 percent 6.5 times PE ratio Ratios for both years are: 2020 2021 77.50% 73.33% Gross Profit Margin Net Profit Margin 53.33% 46.25% Current Ratio 1.81 1.33 1.51 0.89 105.85 days Quick Ratio Receivables Collection Period Earnings Per Share Price Earning Ratio 73.33% 77.50% Dividend Yield 107.07 days 80 pence 3.13 times 93 pence 3.57 times 4.80% 5.45% Prepare a report to the management on the following category. You are required to calculate the ratio and critically comment it. Also suggest improvements to the ratios for the organisation where possible. (i) Profitability ratio (ii) Efficiency ratio (iii) Liquidity ratio (iv) Investor's Ratio (v) The weakness of Ratios