... 29.92% in 2000. Management boosts investor confidence when they successfully convert debt into cheaper equity, slashing the gearing ratio to 22.5% in just one year. This is a measure of sound management because dividends are payable at the discretion of management, who have exercised the option of financing operations through retained income, instead of allowing cash to flow out of the firm through costly and legally enforceable debt. However, though debt has been liquidated through the period, management have been extending their o/d gradually, probably as a means to finance short term costs associated with the increasing production levels between 2000 and 20002. Profitability of the company has increased since 1999 because while sales have been increasing on average, operating expenses have remained constant for the duration of the period under scrutiny. This is in spite of the fact that they are being spread over an increasing level of output. Another positive indicator of ...

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