Based on Question 2Analyse the financial statements that have been prepared by Trend Ltd’s financial director. In particular, comment on the following aspects of the company:
– Areas of concern in financial performance, focussing mainly on information from the income statement. (17 marks)
– Areas of concern in financial health, focussing on ratios dependent on the income statement and the balance sheet. (17 marks)
– Areas of concern in cash flow management, focussing mainly on information available from the cash flow statement. (16 marks)
You should use your knowledge gained from Readings 23–25, together with the tools and techniques discussed in Reading 26 “Analysing Financial Performance”, to construct your answer. You should select those tools and methods that you feel are appropriate to this question to carry out any relevant calculations. Show the workings out for your calculations. State what each calculation might mean if you identify it as an area of concern, i.e. explain why your figures may be of concern to Trend Ltd.
Make sure that you note the most obvious matters of concern
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