Repot based on prepared financial statment Essay

Repot based on prepared financial statment - Essay Example The company’ profitability position was strong. It generated strong ROCE of 17.9% and ROA of 15.73. It implies that the company was efficiently utilizing its assets to generate high profits from its operations. It was reflected from operating profit margin of 10.4% and gross profit margin of 48.70%. The liquidity position of the company was reported to be strong. Both current and quick ratios had values greater than one, which is significant as the company had a high value of current assets that could cover its current obligations. The company’s converted its inventory into sales in 76.6 days, which suggested slow movement and inventory turnover of just 4.77. However, the company was efficient to collect cash for its receivables. On the other hand, the company paid its suppliers in 46.7 days. Moreover, the company only generated  £1.51 of sales for every  £1 invested in assets. The company’s leverage position was very weak. The gearing ratio value was 21.28, which suggested that the company highly depends on external borrowing to meet its business requirements. Moreover, it incurred high interest costs that consumer most of the company’s operating profits i.e.