QUESTION 3: RATIO ANALYSIS (40 marks) The shareholders of Utilities for All plc wanted to evaluate the performance of the company for the year ended 31 January 2020 The following financial information - in the form of a TB is provided regarding their performance in the year to 31 January 2020. Credit (6) Debit (6) 51,098 Trade Receivables Sales Revenue Equity General Expenses Bank Balance 1,925,478 750,000 21,018 8,259 185,369 904,896 3,500,000 549.373 41,859 5,150,000 75,325 35,845 101,000 Purchases Long Term Loans Retard pwofit Marketing Expenses Land and Buildings Opening Inventory Motor Expenses Vehicles: Cost Vehides: Accumulated Depreciation Vehides: Depreciation Charge Trade Payables Rent Fidures and Fittings: Cost Fixtures and Fittings: Acumulated Depreciation Fixtures and Fittings: Depreciation Charge Cash in Office 21.589 12,859 19,859 102,589 150,000 75,250 17,500 6,849,808 6,849,808 3 Cosing Inventory 54,685 is e e a) Based on the information above, help the company's accountant to calculate the following: Profitability Ratios: Gross Profit Ratio/Margin, Operating profit Ratio/Margin, ROCE Liquidity Ratio: Acid Test Ratio Gearing Ratio Provide Formulae and Calculations (15 marks) b) Provide an interpretation for each one of the ratios above. Explain what the ratio is used for, compare to the industry average figures provided below and suggest either how to improve the results or what benefit it provides to Utilities for All plc. (15 marks) c) Provide an evaluation/summary of the business as a whole to demonstrate the overall position of the business and to highlight key areas of concern or benefit for the business's future. (10 marks) Ratio Industry Average Gross Profit Ratio Operating Profit Ratio ROCE Aad Test Ratio Gearing 82.51 % 17.25% 7.35% 1.05 : 1 47.01 %