(Submission Date: 14th May, 2022) Assignment Question 2 Mr. Bediako was recently hired as a financial analyst by Computron Limited, a manufacturer of computer components. His first task was to conduct a financial analysis of the company covering the last two years. To begin, he gathered the following financial statements and other data. Statement of Financial Position 2020 2021 GH GHe Non-Current Assets (Cost) 491,000 527,000 Less Accumulated Depreciation Net Non-Current Assets Current Assets Inventories 146,200 166,200 344.800 360,800 715,200 836,000 Account receivable 351,200 402,000 Cash balance 57.600 $2.000 Total Current Assets 1,124,000 1,290,000 Current Liabilities) Accounts payable 145,600 175,200 Bills payable 200,000 225,000 Accruals 136,000 140,000 Total Current Liabilities 481,600 540,200 Working Capital 642,400 749,800 Capital Employed 987.200 1.110,600 Equity Shares (100,000 shares) 460,000 460,000 Retained Earnings 203.768 225.988 Total Equity 663,768 685.988 Long-Term Debt 323.432 424.612 Capital Employed 987.200 1.110.600 Income Statement 2020 2021 GHe GHe GH GHe Sales 3,432,000 3,850,000 Cost of Goods Sold 2,864,000 Other Expenses 340,000 3,250,000 430,000 Depreciation 18.900 20,000 Total Operating Cost (3.222,900) (3.700,300) EBIT 209,100 149.700 Interest (62,500) (76,000) EBT 146,600 73,700 Tax (40%) (58.640) (29.480) Net Income 87.960 44.220 Earning Per Share (EPS) 0.880 0.442 Statement of Cash Flow (2021) GH GH Operating Activities 44,220 Net Incomes 20,000 Depreciation Increase in Accounts Payable 29,600 4,000 Increase in Accruals Increase in Accounts Receivable (50,800) Increase in Inventories (120,800) Net Cash Flow from Operations (73,780) Investing Activities Investment in Non-Current Assets (36,000) Financing Activities Increase in Notes Payable 25,000 Increase in Long-term Debt 101.180 Payment of Cash Dividends (22,000) Net Cash Flow from Financing 104,180 Net Reduction in Cash Account (5,600) Cash at Beginning of Year 57,600 Cash at End of Year 52,000 Other Data 2021 2020 Share price at 31 December GH6.00 Number of shares GH8.50 100,000 100,000 Dividend per share GH0.22 GH0.22 Industry Average Data for 2021 Ratio Industry Average Current 2.7 Quick 1.0 Inventory turnover 6.0 Debtors collection period 32.0 days Fixed assets turnover 10.7 Total assets turnover 2.6 Debt to equity 50% Fixed charge coverage 2.1 Net profit margin 3.5% ROA 9.1% ROE 18.2% Price earnings 14.2 Market/book 1.4 Assume that you are assistant to Mr. Bediako and that he has asked you to help him prepare a report that evaluate the company's financial condition. (1) Calculate and discuss the ratios below for 2021 and 2020 a) Liquidity Ratios i. Current ratio ii. Acid test ratio b) Turnover Ratios i. Inventory turnover period ii. Debtors collection period iii. Creditors turnover ratio iv. Total assets turnover c) Profitability Ratios i. Gross profit margin ii. Net profit margin iii. Return on total assets (ROA) iv. Return on capital employed (EOCE) v. Return on equity (ROE) d) Market Value Ratios i. Earning per share (EPS) ii. Dividend per share (DPS) iii. Dividend payout ratio iv. Price earnings ratio e) Debt Management Ratios i. Debt to equity ratio ii. Debt to total capital ratio iii. Interest coverage iv. Dividend coverage (2) Write a report to the CEO of the company on the ratios calculated (3) Use the DuPont equation to provide a summary and overview of the Company's Financial Condition. What are the company's major strengths and weaknesses? (4) Compare the 2021 ratios computed to the industry average and comment on it