Business Studies · Oct / Nov 2016 · Paper 11 · Question 2

Dowson is a large business which owns a number of shops. It sells a range of electrical goods such as computers and televisions. The Finance Director has been looking at some recent financial data, as shown in Table 1. He is pleased with Dowson's liquidity but knows he must reduce its high level of debt including an overdraft of $6m. He said: 'The economy is in recession. Many small retailers have failed. Size is an advantage!’ Table 1: Extract of financial data for Dowson 2015 2016 Revenue $280m $300m Profit $175m $180m Current ratio 1.2:1 1.5:1 Acid test ratio 0.8:1 0.5:1 Return on capital employed 10% 10%

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