PART A (7 marks)

Culloden Ltd reported the following information:

	2018	2017
	$	$
Sales Revenue	700,000	670,000
Net Profit after tax	52,000	38,000
Total Current Assets	162,000	144,000
Total Non-current Assets	400,000	370,000
Total Current Liabilities	75,000	80,000
Total Non-current Liabilities	110,000	125,000

Required:

a) Using the above information, you are required to calculate the following financial ratios to two decimal places. Provide a formula and show your workings for each ratio (7 marks).

i) Profit margin for 2018 (2 marks) ii) Debt/Asset ratio for 2018 (2 marks) iii) Current Ratio for 2017 (2 marks) b) Provide a recommendation to Culloden Ltd regarding how the company could improve the profit margin in 2018. (1 mark)

PART B (6 marks)

Cairns Ltd and Reef Ltd have provided the following information, which relates to the year ended 30 June 2022.

	Cairns Ltd	Reef Ltd
Return on assets	8.80%	12.10%
Current ratio	2.00:1	1.35:1
Debt/asset ratio	60.2%	80.4%
Profit Margin	7.5%	12.0%

Required:

Using the above information comment on each company's profitability, solvency and liquidity. In your discussion indicate which ratio(s) would be used to evaluate each category of performance and overall which company has the better performance for each ratio. (6 marks)