Heightway Co is a railway company. Heightway operates a passenger railway service and is responsible for the operation services and maintenance of track signalling equipment and other facilities such as stations. In recent years it has been criticised for providing a poor service to the travelling public in terms of punctuality, safety and the standard of facilities offered to passengers. In the last year Heightway Co has invested over N$20 million in new carriages, station facilities and track maintenance programmes in an attempt to counter these criticisms. Summarised financial results for Heightway Co for the last two years are given below.
Summarised statement of financial position as at 31 December
Calculate the following ratios for Heightway Co for 2013 and 2014, clearly showing your workings.
i)Return on capital employed (also known as turn on investment ROI) based upon capital employed.
ii. Net profit margin
iii. Assets turnover
iv. Current ratio
b, Briefly comment on the financial performance of Heightway Co in 2013 and 2014 as revealed by the above ratios and suggest causes for any changes.
c, Suggest any THREE non-financial indicators that could be useful in measuring the performance of a passenger railway company and explain why your chosen indicators are important.
d, Explain what is meant by short-termism and describe decisions involving the trade-off between short-term and long-term objectives
e) Suggest any THREE ways in which in which a long-term view can be encouraged.
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