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  3. (b) calculate the following ratios for mckie ltd:

(b) Calculate the following ratios for McKie Ltd: i. Current ratio ii....

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Question

Accounting

(b) Calculate the following ratios for McKie Ltd:

i. Current ratio

ii. Gearing ratio

iii. Debt to Equity ratio

iv. Return on capital employed

v. Return on shareholders equity

  1. marks)

(c) Write a report to management on the Liquidity, Solvency, and Profitability of McKie Ltd

relative to the industrys performance below:

Current ratio 1.5 : 1
Gearing ratio 35%
Debt to Equity 0.45 : 1
Return on capital employed 35%
Return on shareholders' equity 40%

(10 marks)

(d) Internally generated Goodwill can be recognized in the financial statements under certain

conditions. Please discuss the preceding statement making reference to any relevant

accounting standard. (5 marks)

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