Required tasks:

1. Discuss the advantages (+) and the limitations (-) of financial ratios as a tool of financial analysis.

2. Calculate the companys financial ratios, namely Liquidity (any two ratios), Leverage or Gearing (any two ratios), Profitability (any two ratios) and Activity or Efficiency (any two ratios).

3.4 The directors of Helena Beauty Products Ltd have been presented with the following abridged financial statements: Income statement for the year ended 30 September 2015 2016 000 000 000 000 Sales revenue 3,600 3,840 Cost of sales Opening inventories 320 400 Purchases 2,240 2,350 2,560 2,750 Closing inventories _(400) (2,160) (2,250) Gross profit 1,440 1,590 Expenses (1,360) 1,500 Operating profit 90 Corporation tax (15) _(20) Profit before taxation Interest payable Profit for the year (500) 2016 000 1,860 400 500 960 8 Statement of financial position as at 30 September 2015 000 ASSETS Non-current assets Property, plant and equipment 1,900 Current assets Inventories Trade receivables 750 Cash at bank 1,158 Total assets 3,058 EQUITY AND LIABILITIES Equity 1 ordinary shares 1,650 Share premium account Retained earnings 1,018 2,668 Current liabilities Total equity and liabilities 3,058 1,464 3,324 1,700 116 1,058 2,874 450 3,324 390