a) The following ratios have been extracted from an analysis of the accounts of three companies – North, South and East: Required: Comment on the respective performance of each of the three companies.

a) The following ratios have been extracted from an analysis of the accounts of three companies – North, South and East: Required: Comment on the respective performance of each of the three companies.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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(a) The following ratios have been extracted from an analysis of the accounts of three companies – North, South and East:

Required: Comment on the respective performance of each of the three companies.

(b) ‘The consolidation of financial statements hides rather than provides information.’ Discuss.

North
South
East
Profit/Sales x 100
5%
4%
3%
Asset turnover
5 times
3 times
4 times
Financial leverage
2
4
5

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