Question Four

i. Accounting ratios are only as good as the data on which they are based. Discuss.

ii. What does ROCE, EPS and P/E ratios and why are they important to a business entity.

iii. What is Capital gearing and how might it be calculated

iv. What is the possible link between the following ratios: (a) profitability and efficiency; (b) profitability and liquidity; (c) profitability and investment,

and (d) efficiency and liquidity.