What does it mean if a business is solvent? 2.Describe the 3 key drivers of return on equity for a company. In other words, describe the three areas that a company focus on in order to maximise shareholders’ wealth?
Question
Using the provided information answer the following questions.
The following results relate to Life Healthcare Ltd, a private hospital group of companies, for the year ended 30 September
2012:
2012 2011
Sales R10 937m R9 812m
Net Profit R1 743m R1 492m
Total assets R9 256m R8 468m
Equity R3 941m R3 518m
1.What does it mean if a business is solvent?
2.Describe the 3 key drivers of return on equity for a company. In other words, describe the three
areas that a company focus on in order to maximise shareholders’ wealth?
3.Calculate the asset efficiency (return on assets) for Life Healthcare Ltd for 2012. Provided that in
(2011: 1.16 times).
4.Comment on the movement in asset efficiency between the two years, and briefly indicate the
reasons for the change.
5.Calculate the profitability or margins (net margin) of Life Healthcare Ltd for 2012 given that in 2011
it was 15.2% and comment on the movement and briefly indicate the reason for the change.
6 What is the significance of the Du Pont Analysis?
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