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(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
- 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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