Orange plc Financial Statement Coursework Example | Topics and Well Written Essays - 2000 words

Orange plc Financial Statement - Coursework Example The company’s return on equity ratio was 25% in 2014 and 8.74% in 2015. The return on equity ratio measures the company’s performance in earning return to its shareholders. Despite the company having a low ratio in 2015, it had significant high performance in 2014 by having a fair return to its shareholders. The return on assets was 3.21% in 2015 and 10.48% in 2014. The return on assets ratio measures the company’s performance in generating sufficient profits from its total assets. The company had a low ratio in 2015 desspite the high ratio it had in 2014. This showed a tremendous decline in the company’s performance. The maintenance of a 100% mark up between the two years was a desirable aspect of the company performance. There was a decline in the return on capital employed between the two years using the the two different methods of computing. This trend is undesirable and should be changed since it shows a decline in the company’s performance. The company’s current ratio was 2.05 in both 2014 and 2015. This ratio measures the company’s liquidity by determining the extent in which the company’s current assets can offset its current liabilities. The company maintains a current ratio that is above in both the two financial years implying that the company’s liquidity position is at a fair place since it can easily offset its current obligations with its current assets. The maintenance of this ratio is thus a positive indicator of the company’s liquidity position. The company’s quick ratio was 1.27% in 2014 and 1.31% in 2015. The quick ratio measures the company’s liquidity in a similar way like how the current ratio does but it does excludes the inventory from the current assets. There is exclusion of inventory from the current assets since it is not easily converted into cash like the other current assets. This means basing the company’s liquidity on inventory is