Final answer:
A financial analysis involves calculating ratios to assess a company's performance. For Honey Bun Ltd and Consolidated Bakeries Ltd, we need to calculate solvency, liquidity, profitability, investment, and asset management ratios for the past three years.
Step-by-step explanation:
A financial analysis involves calculating various ratios to understand a company's financial performance. For Honey Bun Ltd and Consolidated Bakeries Ltd, we need to calculate solvency, liquidity, profitability, investment, and asset management ratios for the past three years. Each ratio provides insights into different aspects of the company's operations.
For the solvency ratio, we calculate the debt-to-equity ratio and interest coverage ratio which determine a company's ability to meet its financial obligations. Liquidity ratios measure a company's ability to meet short-term obligations, such as the current ratio and quick ratio. Profitability ratios, such as return on assets and return on equity, assess a company's ability to generate profits. Investment ratios, such as price to earnings ratio and return on investment, help evaluate a company's attractiveness to investors. Lastly, asset management ratios, like inventory turnover and receivables turnover, assess how efficiently a company manages its assets.
After calculating these ratios for both companies over the past three years, we can analyze the trends and discuss their implications. It's important to go beyond stating the trend and provide a well-developed discussion of what the trend signifies for each ratio.