You need to compute the ratio for the year 20X9, compare it with the calculated ratios

table. Required: (a) You need to compute the ratio for the year 20X9, compare it with the calculated ratios 20X8 and the industry average. (15 marks) (b) The board of directors have asked you to write a report about the performance of the company compared to last year and the industry average. (20 marks)- word count -1500 (c) Discuss the advantages and limitation of ratio analysis (15 Marks) - word count - 500 The following information has been extracted from the recently published accounts of DG. EXTRACTS FROM THE STATEMENTS OF PROFIT OR LOSS TO 30 APRIL 20X9 20X8 $'000 $'000 Sales 11,200 9,750 Cost of sales 8,460 6,825 Net profit before tax 465 320 This is after charging: Depreciation 360 280 Loan note interest 80 60 Interest on bank overdraft 15 9 Audit fees 12 10 STATEMENTS OF FINANCIAL POSITION AS AT 30 APRIL 20X9 20X8 $'000 $'000 $'000 $'000 Assets Non-current assets 1,850 1,430 Current assets Inventory 640 490 Receivables 1,230 1,080 Cash 80 120 1,950 1,690 Total assets 3,800 3,120 Equity and liabilities Equity Ordinary share capital 800 800 Retained earnings 1,310 930 2,110 1,730 Non-current liabilities 10% loan stock 800 600 Current liabilities Bank overdraft 110 80 Payables 750 690 Taxation 30 20 890 790 Total equity and liabilities 3,800 3,120 N The following ratios are those calculated for DG, based on its published accounts for the previous year, and also the latest industry average ratios: DG Industry 30 April 20X8 average ROCE (capital employed = equity and debentures) 16.30% 18.50% Profit/sales 3.90% 4.73% Asset turnover 4.19 3.91 Current ratio 2.14 1.90 Quick ratio 152 1.27 Gross profit margin 30.00% 35.23% Accounts receivable collection period 40 days 52 days Accounts payable payment period 37 days 49 days Inventory turnover (times) 13.90 18.30 Gearing 26.75% 32.71%