This question has two(2) parts.

PART A (7 marks)

Blaxland Ltd reported the following information:

	2020	2019
	$	$
Sales Revenue	250,000	320,000
Net Profit after tax	68,000	47,000
Total Current Assets	117,000	154,000
Total Non-current Assets	245,000	240,000
Total Current Liabilities	90,000	76,000
Total Non-current Liabilities	140,000	110,000

Required:

a) Using the above information, you are required to calculate the following financial ratios to two decimal places. Provide a formula and show your workings for each ratio.

i) Profit margin for 2019 (2 marks) ii) Current Ratio for 2020 (2 marks) iii) Return on Assets ratio for 2020 (2 marks) b) Provide a recommendation to Blaxland Ltd regarding how the company could improve the current ratio for 2020. (1 mark) PART B (6 marks)

Mosman Ltd and Gorge Ltd have provided the following information, which relates to the year ended 30 June 2022.

	Mosman Ltd	Gorge Ltd
Profit Margin	12.0%	7.5%
Debt/asset ratio	80.4%	60.2%
Return on assets	12.4%	8.6%
Current ratio	1.4:1	2.00:1

Required:

Using the above information comment on each company's profitability, solvency and liquidity. In your discussion indicate which ratio(s) would be used to evaluate each category of performance and overall which company has the better performance for each ratio. (6 marks)

PART A

a)

i) Profit margin for 2019

ii) Current Ratio for 2020

iii) Return on Assets ratio for 2020

b)

PART B

Profitability

Solvency

Liquidity