a) Calculate the following ratios for 2016 and 2015, showing detailed calculations as to how you arrive at each number.A ROEB Gross profit marginC Total asset turnoverD Inventory turnoverE Current ratioF Debt-to-equityG Interest coverage ratio. b) Using the financial statements and the ratios calculated above (and any other ratios you like to calculate), discuss the performance of Cobham PLC in 2016. c) Critically discuss the need for the public limited companies to prepare a Statement of Cash Flows and explain the usefulness of the information contained therein from the perspective of a financial analyst. Below you will find the financials of Cobham PLC for 2014-2016:Income statement £m201620152014Revenue2,072.0(1,567.3) (1,408.2) (1,290.1)663.81,943.91,851.7Cost of salesGross profitSG&A376.6561.6(1,155.7)(779.1)4.1(651.8)12.0(504.0)57.6Operating (loss) profitFinance income5.26.4(39.7)24.3Finance cost(72.9)(847.9)52.8(795.1)(57.0)(39.8)2.1(37.7)(Loss)/profit before taxationТахation4.729.0(Loss)/profit after taxationBalance sheet £mNon-current assetsPPE & IntangiblesInvestment propertiesInvestment in joint ventures and associatesTrade and other receivablesDeferred tax asset2016201520141,588.82,109.44.33.02,430.810.43.13.63.666.042.371.311.451.110.512.62,212.0Financial assets25.81,730.113.72,519.6Current assetsInventories405.3410.4429.5Trade and other receivables409.8366.0435.3Current tax receivables3.18.60.4Financial assets (including cash)244.71,062.9320.61,105.6236.41,101.6Current liabilitiesBorrowings and other financial liabilitiesTrade and other payables103.1199.722.2398.1505.5Provisions180.674.360.5Current tax liabilities149.5864.0125.1797.2119.2707.4Non-current liabilities1,462.336.2Borrowings and other financial liabilitiesTrade and other payablesProvisionsDeferred tax liabilities1,235.731.51,359.024.868.257.327.666.5134.5102.01,801.5102.0Retirement benefit obligations87.01,439.156.71,610.7Equity489.9909.71112.3

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Answered: a) Calculate the following ratios for…

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter17: Financial Statement Analysis

Section: Chapter Questions

Problem 4AP

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Question

a) Calculate the following ratios for 2016 and 2015, showing detailed calculations as to how you arrive at each number.

A ROE

B Gross profit margin

C Total asset turnover

D Inventory turnover

E Current ratio

F Debt-to-equity

G Interest coverage ratio.

b) Using the financial statements and the ratios calculated above (and any other ratios you like to calculate), discuss the performance of Cobham PLC in 2016.

c) Critically discuss the need for the public limited companies to prepare a Statement of Cash Flows and explain the usefulness of the information contained therein from the perspective of a financial analyst.

Below you will find the financials of Cobham PLC for 2014-2016:
Income statement £m
2016
2015
2014
Revenue
2,072.0
(1,567.3) (1,408.2) (1,290.1)
663.8
1,943.9
1,851.7
Cost of sales
Gross profit
SG&A
376.6
561.6
(1,155.7)
(779.1)
4.1
(651.8)
12.0
(504.0)
57.6
Operating (loss) profit
Finance income
5.2
6.4
(39.7)
24.3
Finance cost
(72.9)
(847.9)
52.8
(795.1)
(57.0)
(39.8)
2.1
(37.7)
(Loss)/profit before taxation
Тахation
4.7
29.0
(Loss)/profit after taxation
Balance sheet £m
Non-current assets
PPE & Intangibles
Investment properties
Investment in joint ventures and associates
Trade and other receivables
Deferred tax asset
2016
2015
2014
1,588.8
2,109.4
4.3
3.0
2,430.8
10.4
3.1
3.6
3.6
66.0
42.3
71.3
11.4
51.1
10.5
12.6
2,212.0
Financial assets
25.8
1,730.1
13.7
2,519.6
Current assets
Inventories
405.3
410.4
429.5
Trade and other receivables
409.8
366.0
435.3
Current tax receivables
3.1
8.6
0.4
Financial assets (including cash)
244.7
1,062.9
320.6
1,105.6
236.4
1,101.6
Current liabilities
Borrowings and other financial liabilities
Trade and other payables
103.1
199.7
22.2
398.1
505.5
Provisions
180.6
74.3
60.5
Current tax liabilities
149.5
864.0
125.1
797.2
119.2
707.4
Non-current liabilities
1,462.3
36.2
Borrowings and other financial liabilities
Trade and other payables
Provisions
Deferred tax liabilities
1,235.7
31.5
1,359.0
24.8
68.2
57.3
27.6
66.5
134.5
102.0
1,801.5
102.0
Retirement benefit obligations
87.0
1,439.1
56.7
1,610.7
Equity
489.9
909.7
1112.3

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