The following are the financial statements (along with common sized analysis) of XYZ Ltd.
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PROFIT AND LOSS ACCOUNT
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Statement Date 3/31/2008
Amounts in: US$ Millions
No. of Months 12 %
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3/31/2009
12
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%
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Turnover 36,441 100.0
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42,674
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100.0
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Less: Carriage inwards 701 1.9
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822
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1.9
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Less: Cost of Goods Sold 11,005 30.2
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14,443
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33.8
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Gross Profit / (Loss) 24,735 67.9
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27,409
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64.2
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Less: Admin Overheads 16,469 45.2
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18,997
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44.5
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Less: Selling Overheads 3,755 10.3
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3,797
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8.9
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Less: Depreciation 1,652 4.5
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2,150
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5.0
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Less: Amortization of Intangibles 48 0.1
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61
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0.1
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Total Operating Expenses 21,924 60.2
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25,005
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58.6
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Operating Profit/(Loss) 2,811 7.7
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2,404
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5.6
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Add: Other Income/(Expenses) 3,027 8.3
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(910)
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(2.1)
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Less: Interest Payable 734 2.0
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535
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1.3
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Net Profit/(Loss) before Taxation 5,104 14.0
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959
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2.2
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Less: Current Taxation 59 0.2
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(78)
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(0.2)
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Less: Deferred Taxation (31) (0.1)
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(7)
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Net Profit/(Loss) after Taxation 5,076 13.9
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1,044
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2.4
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BALANCE SHEET - ASSETS AND LIABILITIES
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Statement Date
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3/31/2008
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3/31/2009
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CURRENT ASSETS
Cash
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10,360
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%
22.3
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7,168
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%
15.1
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Trade Debtors
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1,679
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3.6
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1,107
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2.3
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Liquid Assets
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12,039
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25.9
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8,275
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17.4
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Stock
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751
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1.6
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1,053
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2.2
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Due from Related Companies
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1,384
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3.0
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2,070
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4.4
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Advance Lease Deposits
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912
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2.0
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900
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1.9
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Other Debtors
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1,482
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3.2
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1,682
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3.5
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Prepayments
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1,723
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3.7
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1,350
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2.8
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Available for Sale Financial Assets
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96
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0.2
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-
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Held to Maturity Investments
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216
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0.5
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200
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0.4
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Derivatives
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188
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0.4
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-
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Other Current Assets
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6,001
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12.9
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6,202
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13.1
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Total Current Assets
FIXED AND NON-CURRENT ASSETS
Total Fixed Assets
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18,791
21,369
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40.4
45.9
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15,530
29,086
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32.7
61.3
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Held-to-Maturity Investments
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2,048
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4.4
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113
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0.2
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Investment in Joint Ventures
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560
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1.2
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441
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0.9
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Loans and other receivables
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1,228
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2.6
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1,039
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2.2
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Other Operating Non-Current Assets
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223
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0.5
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192
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0.4
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Derivatives
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1,377
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3.0
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125
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0.3
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Other Non-Current Assets
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5,436
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11.7
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1,910
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4.0
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Total Fixed Assets and Non-Current Assets INTANGIBLE ASSETS
Total Intangible Assets
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26,805
919
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57.6
2.0
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30,996
924
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65.3
1.9
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TOTAL ASSETS
CURRENT LIABILITIES
Total Short Term Loans
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46,515
1,416
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100.0
3.0
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47,450
1,372
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100.0
2.9
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Trade Creditors
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6,916
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14.9
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7,453
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15.7
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Due to Related Parties
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56
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0.1
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194
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0.4
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Dividends Payable
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912
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2.0
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-
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Tax Payable
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162
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0.3
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23
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Other Creditors
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5,666
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12.2
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4,883
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10.3
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Accruals
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165
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0.4
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169
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0.4
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Derivatives
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170
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0.4
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31
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0.1
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Total Current Liabilities
NON-CURRENT LIABILITIES
Total Long Term Debt
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15,463
12,301
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33.2
26.4
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14,125
15,140
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29.8
31.9
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Total Other Non-Current Liabilities
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2,063
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4.4
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1,774
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3.7
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Total Non-Current Liabilities
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14,364
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30.9
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16,914
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35.6
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CAPITAL AND RESERVES
Ordinary Shares
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801
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1.7
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801
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1.7
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Other Reserves
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782
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1.7
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-
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Retained Earnings
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15,105
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32.5
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15,610
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32.9
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Total Capital and Reserves
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16,688
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35.9
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16,411
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34.6
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TOTAL LIABILITIES
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46,515
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100.0
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47,450
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100.0
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Using the above information, complete a comprehensive ratio analysis for XYZ Ltd:
(i) Calculate liquidity ratios: current and quick ratios.
(ii) Calculate activity ratios: inventory holding period, debtors collection period.
(iii) Calculate finance ratios: gearing ratio, debt-to-equity ratio, net debt to EBITDA.
(iv) Calculate coverage ratios: interest coverage ratio, finance cost to sales.
(v) Calculate profitability ratios: gross profit margin, net profit margin.
(vi) Use the DuPont method, and after calculating the component ratios, compute the ROCE for this firm.
(vii) Calculate Altman's Z Score and appraise the bankruptcy risk.