See Next Page 4QQMN501 Cash 3,000,000 19,000,000 5,000,000 12,000,000 36,000,000 60,000,000 Question 2 The following are key extracts from the financial statements and market data of King's Motors PLC and its competitor LSE Motors PLC for financial years ending 31" of December 2020 and 2021: Revenue King's Motors PLC Gross Profit Operating Profit Interest Expense Profit for The Year Trade Receivables 2020 2021 26,000,000 132,000,000 15,000,000 80,000,000 (35,000,000) 12,000,000 (2,000,000 8,000,000 (37,000,000 4,000,000 LSE Motors PLC 2020 2021 900.000.000 950,000,000 300.000.000 120,000,000 Revenue Gross Prof Operating Profit Interest Expense Profit for The Year 120,000,000 160.000.000 20,000,000 (30,000,000) 100,000,000 130.000.000 Trade Receivables Cash Trade Payable 5,000,000 18,000,000 Trade Payable 25,000,000 30,000,000 80,000,000 90,000,000 50,000,000 60,000,000 120.000.000 150.000.000 Long term Loan 4,000,000 35,000,000 Long term Loan 250.000.000 400.000.000 Share Capital (10) 5,000,000 25,000,000 Retained Earnings 7,000,000 11,000,000 Share Capital 100 Retained Earnings Dividends (Total Payout) Dividends (Total Payout 30,000,000 250,000,000 300,000,000 200.000.000 285,000,000 5.000.000 Share Price (per shares Cash from operations 2.000.000 4,000,000 Share Price per share) Cash from operations 25,000,000 50,000,000 a) Discuss three financial ratios you might consider if you were a supplier to King's Motors Ltd and they asked for 10,000,000 of purchases on credit in 2021. Please ensure to justify your chosen ratios and state whether you agree to this deal? Please ensure in your answers to make clear what insights can be drawn from each of your chosen ratios. Please also discuss what further information you would request from or about King's Motors PLC's before offering your product or services on credit? (10 marks) b) Ensuring your answer is different to the ratios used in answer to part a, assume the role of a management consultant and suggest at least two improvements you would advise King's Motors makes to its business based upon conducting ratio analysis. Please in your answer ensure to justify why you believe your chosen recommendations are important. Please also discuss what further information you would request from or about King's Motors to support you in your recommendations. (10 marks) See Next Page 4QQMN501 c) Adopting the perspective of a financial analyst, evaluate the performance of King's Motors PLC and its biggest competitor LSE Motors PLC. Please advise on which of the two companies you would invest in given the information above and why? Please state your rationale behind your chosen investment. In your answer, please also discuss what further information you might seek to support your decision. (10 marks) Total marks for Question 2 (30 marks) See Next Page 4QQMN501 80,000,000 Question 2 The following are key extracts from the financial statements and market data of King's Motors PLC and its competitor LSE Motors PLC for financial years ending 31" of December 2020 and 2021: Revenue Gross Profi Operating Prof King's Motors PLC 2020 2021 26,000,000 132,000,000 15,000,000 (35,000,000 12,000,000 LSE Motor PLC 2030 2021 Revenue Gross Prof 900,000,000 950,000.000 300.000.000 320,000,000 Operating Prof 120,000,000 140,000,000 Interest Expense 2,000,000,000,000 Profit for The Year (37,000,000) 4,000,000 Interest Expense Profit for The Year 20,000,000 30,000,000) 100.000.000 130,000,000 Trade Receivables Inventories Cash 3,000,000 19,000,000 5,000,000 12,000,000 Trade Receivab Inventories 25.000.000 30,000,000 80.000.000 90,000,000 36,000,000 40,000.000 Cash 50.000.000 60,000,000 Trade Payable 5,000,000 18,000,000 Trade Payable 120.000.000 150,000.000 Long term Loan 4,000,000 35,000,000 Long term isan 250.000.000 400.000.000 Share Capital (10) 5,000,000 25,000,000 Share Capital Retained Earnings 7,000,000 11,000,000 250,000,000 300,000.000 200.000.000 285.000.000 Dividends (Total Payout Share Price (per share Cash from operations 2,000,000 6,000,000 Dividends (Total Payout 30.000.000 45,000,000 Share Price per share Cash from operations 5,000,000 50,000,000) a) Discuss three financial ratios you might consider if you were a supplier to King's Motors Ltd and they asked for 10,000,000 of purchases on credit in 2021. Please ensure to justify your chosen ratios and state whether you agree to this deal? Please ensure in your answers to make clear what insights can be drawn from each of your chosen ratios. Please also discuss what further information you would request from or about King's Motors PLC's before offering your product or services on credit? (10 marks) b) Ensuring your answer is different to the ratios used in answer to part a, assume the role of a management consultant and suggest at least two improvements you would advise King's Motors makes to its business based upon conducting ratio analysis. Please in your answer ensure to justify why you believe your chosen recommendations are important. Please also discuss what further information you would request from or about King's Motors to support you in your recommendations (10 marks) See Next Page 4QQMN501 c) Adopting the perspective of a financial analyst, evaluate the performance of King's Motors PLC and its biggest competitor LSE Motors PLC. Please advise on which of the two companies you would invest in given the information above and why? Please state your rationale behind your chosen investment. In your answer, please also discuss what further information you might seek to support your decision. (10 marks) Total marks for Question 2 (30 marks)