Write a Report to the Manageing Director highlighting, giving reasons, the 4 main areas of concerns which he needs to be made aware of and outlining, with reason what other ratios you would like to have been given.

Requirement (A) – based on the undermentioned assignment –
Write a Report to the Manageing Director highlighting, giving reasons, the 4 main areas of concerns which he needs to be made aware of and outlining, with reason what other ratios you would like to have been given.

Requirement (B) – Discuss the main limitations of relying too heavily on ratios as a method of analysing a company’s performance.

Assignment
Impulse Ltd has given you the following extracts from its ratio analysis for the year ended 31st December 2011.

Description Year – 31.12.2010 Year 31.12.2011
Current Ratio 1.9:1 0.9:1
Debtor Days 43 days 58 days
Net Profit 6% 5%
Creditor Days 66 days 60 days
Interest Cover 12 times 4 times
Gearing 28% 65%
Dividend Cover 8 times 6 times
Dividend Yield 7% 2%

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