Question
Rozelle Ltd and Balmain Ltd have provided the following information, which relates to the year ended 30 June 2020. Rozelle Ltd Balmain Ltd Industry Average
Rozelle Ltd and Balmain Ltd have provided the following information, which relates to the year ended 30 June 2020.
Rozelle Ltd | Balmain Ltd | Industry Average | |
Current ratio | 1.03:1 | 1.91:1 | 1.65:1 |
Quick ratio | 0.77:1 | 1.09:1 | 0.95:1 |
Times interest earned ratio | 3.1 times | 5.9 times | 5.3 times |
Debt to asset ratio | 101.4% | 70.2% | 75.3% |
Return on shareholders' equity | 17.22% | 11.52% | 14.85% |
Return on assets | 18.10% | 12.31% | 15% |
Inventory turnover (days) | 65 days | 55 days | 60 days |
Receivable turnover (days) | 78 days | 48 days | 47 days |
Required:
Using the above informationevaluate each company's profitability,liquidity and solvency.Your discussion should compare both companies to each other and to the industry average. (6 marks) Word limit 200.
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