QUESTION 1 Harvey's Point Limited operates a hotel in County Donegal and the following are its...

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QUESTION 1 Harvey's Point Limited operates a hotel in County Donegal and the following are its results for the last three years with its year end being 31 December: 2018 2019 2020 Revenue increase / (decrease) (5%) 4% 12% Non-Current Assets increase 40% 10% 2% Gross Profit Margin 60% 61% 66% Net Profit Margin 23% 25% 21% Return on Capital employed 12% 15% 10% Current ratio 1.4:1 1.6:1 1.8:1 Acid ratio 0.6:1 1.0:1 0.9:1 Debt to Equity ratio 50% 44% 43% Dividend Cover 4 times 8 times 10 times Required: (a) (b) Using all of the above information, critically analyse the performance of Harvey's Point Limited for the period 2018 to 2020. (15 marks) Identify and critically analyse the main advantages of ratio analysis as a means of assessing the financial performance of a business. (5 marks) (c) Comment on the use of the Gross Profit Margin to the service industry. (5 marks) Total (25 marks) QUESTION 1 Harvey's Point Limited operates a hotel in County Donegal and the following are its results for the last three years with its year end being 31 December: 2018 2019 2020 Revenue increase / (decrease) (5%) 4% 12% Non-Current Assets increase 40% 10% 2% Gross Profit Margin 60% 61% 66% Net Profit Margin 23% 25% 21% Return on Capital employed 12% 15% 10% Current ratio 1.4:1 1.6:1 1.8:1 Acid ratio 0.6:1 1.0:1 0.9:1 Debt to Equity ratio 50% 44% 43% Dividend Cover 4 times 8 times 10 times Required: (a) (b) Using all of the above information, critically analyse the performance of Harvey's Point Limited for the period 2018 to 2020. (15 marks) Identify and critically analyse the main advantages of ratio analysis as a means of assessing the financial performance of a business. (5 marks) (c) Comment on the use of the Gross Profit Margin to the service industry. (5 marks) Total (25 marks)