Using the above information for Watley’s, carry out ratio analysis for liquidity, activity, profitability and gearing.

Part 1
Review the financial information for Watley’s Furniture.

Ratio analysis is a useful tool for businesses to analyse financial performance and to develop plans for future business improvements.

Using the above information for Watley’s, carry out ratio analysis for liquidity, activity, profitability and gearing.

For each of the four categories, ONE ratio only should be considered. The ratio should be calculated for both years i.e. you will work out 4 x 2014 and 4 x 2015 = 8 ratios in total.

This is a technical question with no specific word count limit; a little supporting text to aid presentation is welcomed, but there is no expectation for any detailed analysis.

Part 2
Using the ratios calculated in part 1, carry out critical analysis for each of the 4 pairs of ratios in turn. Your answer should explain what can be gleaned from the ratios, and also what Watley’s should do differently in order to improve their future financial performance.

This is an essay-style question with a word count range of 1500 – 2000 words.

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