The data below appear in the five-year summary of a major international company. A business combination with another major manufacturer took place in FY13. Answer and elaborate on the following questions.

0. 1. The companys total assets at year-end FY9 were GBP 3,500 million. Which of the following choices best describes reasonable conclusions an analyst might make about the companys efficiency? Why?
1. Comparing FY14 with FY10, the companys efficiency improved, as indicated by a total asset turnover ratio of 0.86 compared with 0.64.
2. Comparing FY14 with FY10, the companys efficiency deteriorated, as indicated by its current ratio.
3. Comparing FY14 with FY10, the companys efficiency deteriorated due to asset growth faster than turnover revenue growth.

0. 2. Which of the following choices best describes reasonable conclusions an analyst might make about the companys solvency? Why?
1. Comparing FY14 with FY10, the companys solvency improved, as indicated by an increase in its debt-to-assets ratio from 0.14 to 0.27.
2. Comparing FY14 with FY10, the companys solvency deteriorated, as indicated by a decrease in interest coverage from 10.6 to 8.4.
3. Comparing FY14 with FY10, the companys solvency improved, as indicated by the growth in its profits to GBP 645 million.

0. 3. Which of the following choices best describes reasonable conclusions an analyst might make about the companys liquidity? Why?
1. Comparing FY14 with FY10, the companys liquidity improved, as indicated by an increase in its debt-to-assets ratio from 0.14 to 0.27.
2. Comparing FY14 with FY10, the companys liquidity deteriorated, as indicated by a decrease in interest coverage from 10.6 to 8.4.
3. Comparing FY14 with FY10, the companys liquidity improved, as indicated by an increase in its current ratio from 0.71 to 0.75.

0. 4. Which of the following choices best describes reasonable conclusions an analyst might make about the companys profitability? Why?
1. Comparing FY14 with FY10, the companys profitability improved, as indicated by an increase in its debt-to-assets ratio from 0.14 to 0.27.
2. Comparing FY14 with FY10, the companys profitability deteriorated, as indicated by a decrease in its net profit margin from 11.0 percent to 5.7 percent.
3. Comparing FY14 with FY10, the companys profitability improved, as indicated by the growth in its shareholders equity to GBP 6,165 million.

Exhibit 1 FY10 FY13 FY14 FY11 FY12 Financial statements GBP m GBP m GBP m GBP m GBP m Income statements Revenue 3,717 8,167 4,390 3,624 11,366 Profit before interest and taxation 844 700 704 933 1,579 |(EBIT) Net interest payable -80 -54 -98 -163 -188 -186 Taxation -195 -208 -579 -349 Minorities -125 -94 -99 -105 -167 Profit for the year 484 293 645 352 296 Balance sheets Fixed assets 3,667 3,510 4,758 10,431 11,483 Current asset investments, cash at 316 218 290 561 682 bank and in hand Other current assets 558 514 643 1,258 1,634 Total assets 4,384 4,399 5,691 12,250 13,799 Interest bearing debt (long term) -602 -1,053 -1,535 -3,523 -3,707 Other creditors and provisions (current -1,223 -1,054 -1,102 -2,377 -3,108 Total liabilities -1,825 -2,107 -2,637 -5,900 -6,815 Net assets 3,054 2,559 2,292 6,350 6,984 Shareholders' funds 2,161 2,006 2,309 5,572 6,165 Equity minority interests 398 286 745 778 819 Capital employed 2,559 6,984 2,292 3,054 6,350 Cash flow Working capital movements Net cash inflow from operating 107 -53 71 85 1,568 864 859 975 2,292 activities