Final answer:
The student is tasked with computing financial ratios using historical GDP values and considering economic factors such as inflation. To perform this task, understanding and utilizing index numbers, base years, and calculating inflation rates are necessary. Financial ratios include liquidity, profitability, efficiency, and solvency ratios, each requiring specific financial data for computation.
Step-by-step explanation:
The student has been asked to compute financial ratios for a company for fiscal years 2009, 2010, and 2011. Financial ratios are tools that help in assessing the financial health of a company and making comparisons over time or between different firms. The guidelines provided point towards using historical real GDP (Gross Domestic Product) values to carry out the analysis. Although, usually, financial ratios are calculated using financial statements such as balance sheets, income statements, and cash flow statements, for this example, it seems that the GDP data might be relevant for a macroeconomic analysis impacting the financial condition of the company.
To calculate financial ratios, different formulas are applied, depending on which aspect of the company's operations or finances one wishes to analyze. Common financial ratios include liquidity ratios, such as the current ratio and quick ratio, profitability ratios like net profit margin, return on assets (ROA), return on equity (ROE), and efficiency ratios such as inventory turnover and accounts receivable turnover. Also, solvency ratios, which include debt-to-equity ratio and interest coverage ratio, can provide insights into a company's debt levels relative to its equity and earnings.
Furthermore, explaining and using index numbers and base years is essential when simplifying the total quantity spent over a year for products. This approach is used to adjust for inflation and to calculate inflation rates, often using a consumer price index (CPI) or other relevant index numbers.
In conclusion, financial ratios provide a quantitative analysis of a company's financial health, and they require specific financial data to be calculated. The mention of real GDP and inflation rates suggests that in this case, the student may need to understand the broader economic context and its impact on the financials of the company. This includes knowing how to work with index numbers, base years, and the calculation of inflation rates, which can affect the purchasing power of money over time.