You are the owner of $10000$ ordinary shares in the retail company Greatermans that are listed on the Johannesburg Stock Exchange. These shares were bought five years ago at R$10,40$ per share. Currently the price is R$3,80$ per share. Other retailing businesses listed on the JSE such as Pick n Pay and Spar has seen increased profitability and there was a resultant increase in their share prices. $2$ The yearly general meeting required by the JSE of Greatermans is taking place in June $2024.$

As a financial$-$literate person you have perused Greatermans financial statements to calculate the following financial information reflected in the Table below:

Table: Key financial ratios of Greatermans for the current financial year

Ratio Current year $5-$year average Comment

Gross Profit Margin $40\%60\%$

Net Profit Margin $20\%30\%$

ROA $10\%20\%$

ROE $9\%24\%$

Earnings per share $45$ cents R$4,80$

Debit ratio $2\%11\%$

Current ratio $2,5$:$12,0$:$1$

Quick ratio $0,8$:$11$:$1$

You know that the economic outlook for South Africa is generally positive with interest rates set to decline. Consumer spending is also in the increase and inflation is trading at the lower end of the inflation target band of the SA Reserve Bank at $3\%.$ The top management of Greatermans are struggling to turn the retail business around.

As an activist shareholder you have evaluated the situation and are pondering the issues, namely:

$$ What can top management do to improve the financial situation at Greatermans?

$$ What can the shareholders do to assist in improving the financial situation of the business?

Now answer the following three questions

$1.$ Make a copy of the Table in your assignment and write down your comments in the provided column to explain your interpretation of what each of these eight calculated ratios means. $(8)$

$2.$ Write recommendations to top management regarding what they must do to improve each ratio. Use the eight ratios as headings and write down your recommendations for each. $(8)$

$3.$ Write down your recommendations as shareholder as to what you can do to assist to solve the current dilemma. $(4)$