Material to review with asset controllers

1. Financial Statement Analysis Asset management portfolios

24. Walker Ltd Statement of Financial Position as at 31 March

25. Walker Ltd Statement of Financial Performance for year ended 31 March

26. Walker Ltd Statement of Cash Flows for the year ended 31 March

28. Relevant ratios Important note: The calculations of the ratios in this illustration did not use “averages” for total assets, equity and inventory. The 2009 and 2010 year end figures were used and this is a slight variation to the formulas provided. Profitability ratios: Benchmarks 2009 2010 Gross Profit Margin Industry 25% 22% 22.7% Net Profit Margin Industry 7% 7.1% 6.1% Return on Assets 12% 15.6% 15.5% Return on Equity Industry 20% 32% 26%

29. Asset Management ratios: Benchmarks 2009 2010 Inventory Turnover Industry 6 % 5.8 times 5.58 times Asset Turnover Not given 2.2 2.53

30. Liquidity ratios: Benchmarks 2009 2010 Current Ratio Ideal standard 2:1 Acceptable standard 1:1 1.78:1 1.70:1 Quick Ratio Ideal standard 2:1 Acceptable standard 1:1 0.85:1 0.69:1 Days Payable Standard 30 days Credit purchases not available 49.19 days

31. Financial Structure ratios: Benchmarks 2009 2010 Debt/Equity Industry 0.6:1 Standard benchmark 1:1 1.05: 1 0.67:1 TIE Standard benchmark: Between 3 and 5. Below 3 risky. Above 5 very favourable 10.14 times 39.74 times