Tasks and descriptions

1 Calculation of 16 specified financial ratios

2 Analysis of the firm’s recent performance, in terms of positive or negative trends

 Identify which ratios have shown a positive or negative trend over the past three years.

3 Analysis of the firm’s performance, in terms of a comparison with industry averages

 Identify which ratios have shown a positive or negative performance in comparison with industry averages.

4 Summarise the firm’s overall performance

 Summarise the firm’s overall position in terms of profitability, efficiency, liquidity, leverage and potential for investment.

5 Analysis of possible problems with your analysis

 Advise your client if there are reasons why ratio analysis such as this may not be entirely reliable. What should they keep in mind when reviewing the conclusions from the analysis?