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4 marksFinancial Statements Analysis

CAPE Management of Business Unit 1 · 2015 · Paper 2 · Question 5(a)(ii)

Financial information for the year 2013 regarding Tropics Food Retailers Ltd and Carib Food Retailers Ltd is provided.

Outline TWO limitations of ratio analysis.

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Other parts of this question

  1. 5(a)(i)Define the term 'ratio analysis'.[2 marks]
  2. 5(b)(i)Compute the current ratio for Tropics Food Retailers Ltd and Carib Food Retailers Ltd.[3 marks]
  3. 5(b)(ii)Compare the performance of both companies based on your answer in (b)(i), highlighting TWO important points.[4 marks]
  4. 5(c)(i)Explain how liquidity ratios may be useful in assessing the performance of Tropics Food Retailers Ltd and Carib Food Retailers Ltd.[3 marks]
  5. 5(c)(ii)Explain how profitability ratios may be useful in assessing the performance of Tropics Food Retailers Ltd and Carib Food Retailers Ltd.[3 marks]
  6. 5(c)(iii)Explain how efficiency ratios may be useful in assessing the performance of Tropics Food Retailers Ltd and Carib Food Retailers Ltd.[3 marks]
  7. 5(c)(iv)Explain how gearing ratios may be useful in assessing the performance of Tropics Food Retailers Ltd and Carib Food Retailers Ltd.[3 marks]

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