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The Board of ADS Luxury Ltd decide to acquire another company within the designer clothing industry. They identity two options - Murberry and Bucci. In choosing between these options, the Board sets the criteria that the company must have the ability to charge high prices to customers and earn high returns for shareholders Consider the following financial statement information and ratios for both companios Company Murberry Bucci Sales Revenue $480,000 $375,000 Net Profit $143,000 $102,000 Average Shares Outstanding Average Total Assets Average Total Equity 175,000 $360,000 $187,000 185,000 $270,000 $159,500 Quick Ratio Receivables Turnover Ratio Inventory Turnover Ratio Debt to Assets Times Interest Earned 0.82 8.5 6.8 0.71 3.8 1.21 7 3.4 0.45 9.3 a) Using the criteria set out by the Board, which company would you recommend investing in? Explain your recommendation with reference to the information provided and by calculating other relevant ratios (3 marks) b) Analyse cach company's ability to topay their short and long-term debt based on the ratios provided (2 marks) c) Two weeks prior to the Board of ADS Luxury Ltd needing to choose between these two companies, a news article is published reporting that a factory owned by Murberry has been found to have been using child labour. From a sustainability perspective (using the value creation levers) discuss several implications this news may have on the future porformance of Murberry and the decision to be made by ADS Luxury Ltd. (3 marks) Note: Please distinguish between your responses to part a), b) and c) Relevant Formula Profitability Ratios Profit Margin Net Profit/ Sales Revenue Return on Equity Net Profil Avorge Equity Return on Assets Net Profil/Average Tote Assets Earnings Per Share Not Proh/Averago Shares Outstanding Price to Earnings Share Price Earnings per share Liquidity Ratios Current Ratio Current Assets Current Liabilities Quick Ratio (Cash. Short term investments Accounts Recewable) / Current Lists Receivables Turnover - Sales Revenue Average Accounts Receivable Inventory Turnover Cost of Goods Sold Average inventory Solvency Ratios Debt to Assets Ratio -Total Liabilities Total Assets Debt to Equity Ratio Total Limbs Total Times interest Earned Net Datos experto in ponse Interest Expense The Board of ADS Luxury Ltd decide to acquire another company within the designer clothing industry. They identity two options - Murberry and Bucci. In choosing between these options, the Board sets the criteria that the company must have the ability to charge high prices to customers and earn high returns for shareholders Consider the following financial statement information and ratios for both companios Company Murberry Bucci Sales Revenue $480,000 $375,000 Net Profit $143,000 $102,000 Average Shares Outstanding Average Total Assets Average Total Equity 175,000 $360,000 $187,000 185,000 $270,000 $159,500 Quick Ratio Receivables Turnover Ratio Inventory Turnover Ratio Debt to Assets Times Interest Earned 0.82 8.5 6.8 0.71 3.8 1.21 7 3.4 0.45 9.3 a) Using the criteria set out by the Board, which company would you recommend investing in? Explain your recommendation with reference to the information provided and by calculating other relevant ratios (3 marks) b) Analyse cach company's ability to topay their short and long-term debt based on the ratios provided (2 marks) c) Two weeks prior to the Board of ADS Luxury Ltd needing to choose between these two companies, a news article is published reporting that a factory owned by Murberry has been found to have been using child labour. From a sustainability perspective (using the value creation levers) discuss several implications this news may have on the future porformance of Murberry and the decision to be made by ADS Luxury Ltd. (3 marks) Note: Please distinguish between your responses to part a), b) and c) Relevant Formula Profitability Ratios Profit Margin Net Profit/ Sales Revenue Return on Equity Net Profil Avorge Equity Return on Assets Net Profil/Average Tote Assets Earnings Per Share Not Proh/Averago Shares Outstanding Price to Earnings Share Price Earnings per share Liquidity Ratios Current Ratio Current Assets Current Liabilities Quick Ratio (Cash. Short term investments Accounts Recewable) / Current Lists Receivables Turnover - Sales Revenue Average Accounts Receivable Inventory Turnover Cost of Goods Sold Average inventory Solvency Ratios Debt to Assets Ratio -Total Liabilities Total Assets Debt to Equity Ratio Total Limbs Total Times interest Earned Net Datos experto in ponse Interest Expense

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