You have been approached by Dumbledore Ltd.'s main competitor, Voldemort Ltd., to assess the performance of the company as a prospect for a takeover. Using the above data, prepare an analysis of the firm under the following headings: a) Dumbledore's short-term liquidity position b) Dumbledore's operating performance c) Dumbledore's solvency d) Dumbledore's Return on Equity (calculate ROE for 2021 and 2017)
You have been approached by Dumbledore Ltd.'s main competitor, Voldemort Ltd., to assess the performance of the company as a prospect for a takeover. Using the above data, prepare an analysis of the firm under the following headings: a) Dumbledore's short-term liquidity position b) Dumbledore's operating performance c) Dumbledore's solvency d) Dumbledore's Return on Equity (calculate ROE for 2021 and 2017)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Gross margin
Interest coverage
Current ratio
Debt ratio
Inventory
Inventory in days
Receivables
Receivables in days
Payables
Payables in days
Cash Conversion
Cycle
0.37
1.38
0.78
0.44
18.86
38.23
27.21
34.68
34.09
69.12
3.79
0.41
1.52
0.81
0.41
18.13
39.70
25.43
33.06
28.41
62.20
10.56
0.44
1.66
0.83
0.39
17.44
41.23
23.77
31.51
23.67
55.98
16.76
0.47
1.83
0.85
0.37
16.76
42.82
22.21
30.04
19.73
50.39
22.47
0.49
1.97
0.87
0.36
16.12
43.85
20.76
28.63
16.44
44.72
27.76
0.50
2.04
0.89
0.35
15.50
44.90
19.40
28.10
13.70
39.69
33.31
You have been approached by Dumbledore Ltd.'s main competitor, Voldemort Ltd., to assess
the performance of the company as a prospect for a takeover.
Using the above data, prepare an analysis of the firm under the following headings:
a) Dumbledore's short-term liquidity position
b) Dumbledore's operating performance
c) Dumbledore's solvency
d) Dumbledore's Return on Equity (calculate ROE for 2021 and 2017)
Transcribed Image Text:Examine the selected data over the 5-year period as shown in the table below for Dumbledore
Ltd.
Item
Sales
Cost of sales
EBIT
Interest
NPAT
Current assets
Total assets
current liabilities
Total liabilities
Equity
Gross margin
Interest coverage
Current ratio
2021
$m
286.41
180.03
51.18
37.07
35.13
43.85
226.18
55.99
98.99
127.19
0.37
1.38
0.78
Year
2020
$m
280.80
166.69
51.08
33.70
35.10
43.20
221.75
53.58
91.66
130.09
0.41
1.52
0.81
2019
$m
275.29
154.35
50.98
30.64
35.06
42.56
217.40
51.27
84.87
132.53
0.44
1.66
0.89
2018
$m
269.89
142.91
50.88
27.85
35.03
41.93
213.13
49.06
78.58
134.56
0.47
1.83
U.OJ
2017
$m
264.60
134.19
49.88
25.32
34.51
41.31
206.93
47.40
74.48
132.44
0.49
1.97
0.87
2016
$m
252.00
126.00
48.90
24.00
34.00
40.70
200.90
45.80
70.60
130.30
0.50
2.04
0.89
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