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Management Assignment

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Management Assignment

Introduction

The following report evaluates the profitability, liquidity and solvency of Graphite Pty Ltd based on the financial statements for the three-year period between 2010 and 2012.

Key industry standard financial ratios have been used to provide the foundation of this analysis. Each ratio has been analysed based on Graphite's year-on-year financial performance, and a comparison provided against the industry standard benchmark.

The final section of the report summarises the analysis.

2010 2011 2012 Industry Standard Analysis

1346+218 1247+220 (- 40)+280
EBIT (profit before tax + Interest) 1564 1467 240 PROFITABILITY RATIOS
Return on Total Assets 1564 1467 240 Begins (in 2010) close to the industry standard. Remains strong in 2011, but followed by a large drop in 2012 to well below the industry standard.
(EBIT/Total Assets) 13300 13482 13908 11.76% 10.88% 1.73% 12% Net Profit Margin 1564 1467 240 Well above the industry standard in 2010 and 2011. A significant fall in 2012 to a fraction of the industry standard.
(EBIT/Revenue) 14272 14982 19698 10.96% 9.79% 1.22% 8% Gross Margin Percentage 5246 5051 5390 At just below the industry standard in 2010, with a increasing year-on-year decline for the two years after.
((Revenue-COGS)/Revenue) 14272 14982 19698 37% 34% 27% 42% Return on Shareholders' Equity 983 910 -40 Remains reasonably healthy in 2010 and 2011 (at just below the industry average). A large drop in 2012 into the negative.
(NPAT/Equity) 4382 4736 4512 22% 19% -1% 25% Total Asset Turnover 14272 14982 19698 Remains moderately below the industry average in 2010 and 2011. A significant improvement in 2012 to be almost the industry standard. This Indicates that Graphite is using its assets far more efficiently than the

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