Calculation and interpretation of ratios. Data for White Star Limited: Net operating profit after tax is $25 million (2018: $38 million). 1. Use the information above to calculate for 2019 and 2018: a working capital b current ratio c quick ratio
Calculation and interpretation of ratios.
Data for White Star Limited:
1. Use the information above to calculate for 2019 and 2018:
a
b
c quick ratio
d debt-to-equity ratio
e return on equity ratio
f earnings per share ratio.
2. Identify two warning signals that could have negative implications with respect to the company ’ s ability to generate cash flows to meet its future needs. In each case, explain why the signal you have identified could reflect a cash flow problem.
3. At the annual general meeting of White Star, the managing director, Ms Rose Dawson, made the following statement: ‘ Recently a number of articles in the financial press have questioned the financial position of our company. This criticism is totally unjustified. Net profit was $25 million and total assets have increased by $160 million. These results show that 2019 was a very successful year for White Star. ’
Comment on Ms Dawson ’ s statement.
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