Five ratios for one question, whether growth is paying its way, and in this GM506 Unit 2 analysis the answer is returns sliding under the hurdle while leverage stays comfortable. Searches like "gm 506 unit 2 assignment example", "gm506 unit 2 sample" and "gm506 unit 2 example" land here.
What a finished GM506 Unit 2 ratio analysis looks like
Around four pages. A one-paragraph statement of the question opens, followed by a short note explaining why these five measures and not the usual dozen. Each measure then gets a small block: the formula, the inputs with their statement line, the result for 2024 and 2025, and two or three sentences on what the movement means. Operating margin slips from 6.7 to 5.6 percent on revenue that rose 5 percent. Return on invested capital falls from 9.8 to 8.0 percent, now beneath the hurdle. Receivable days climb from 70 to 80, with retainage broken out. Net debt reaches 1.57 times EBITDA from 1.30, and coverage drops from 6.6 to 5.4 times. A closing half page reads the five together as one finding.
How a GM506 Unit 2 example is structured
Selection is the argument. The paper states at the outset that its question concerns whether growth creates value and whether the balance sheet can absorb more of it, and every measure is chosen to answer one half of that. Liquidity ratios are mentioned and set aside, because a current ratio near two says little here. The interpretation sentences carry the weight: each moves from the figure to what it implies for a manager deciding whether to keep taking distant work. Retainage is separated from ordinary receivables, since money withheld until a state project closes is a contract term and not a collection failure, and the paper says so plainly. The joint reading of the five is the actual conclusion: returns are the binding constraint, while borrowing capacity is not, which reframes what the owners should worry about.
One question, split in two
Does growth earn more than its capital costs, and can the balance sheet carry more of it? Each half receives measures, and nothing is computed that neither half needs.
Margin on rising sales
Operating income fell 11.5 percent in 2025 while revenue grew 5.0. The paragraph ties that gap to a cost line rather than to pricing in general, which the statement work in Unit 3 opens further.
Returns beneath the hurdle
After-tax operating profit over debt plus equity less cash gives 8.0 percent against the owners' 10.5. The sentence after it says what that means: recent growth has been diluting value, not adding it.
Retainage kept apart
Receivable days rise from 70 to 80. Without the state retainage balance they move from 53 to 59, which separates a feature of public contracts from slower collection.
Room to borrow, read carefully
Net debt at 1.57 times EBITDA and coverage above five times show capacity. The paper adds that unused capacity is an option for the owners, not a reason to spend it.
Where marks go in GM506 Unit 2
Breadth costs more marks here than anything else: twelve or fifteen ratios, each computed correctly, none connected to a decision. Stronger papers say which measures they chose and why, and present restraint as a judgment rather than an omission. Arithmetic still counts. Return on invested capital is frequently miscomputed by pairing net income with invested capital, or by leaving cash in the denominator, and a visible formula line prevents both. Interpretation sentences that merely restate the figure in words earn little; sentences saying what a manager should now believe earn most of the credit. A comparison across at least two years is typically expected, and papers that treat one year's ratio as a trend tend to be marked down.
Get a GM506 Unit 2 example written to your instructions
Share the statements or case figures assigned for Unit 2, along with the prompt and grading rubric. A first ratio analysis on those figures costs nothing, arrives in 24-48h, and stays limited to the measures your question needs, each one computed from a labeled statement line and followed by what it means for the decision.
GM506 Unit 2 questions, answered
What if the prompt lists specific ratios?
Then those come first, computed exactly as the prompt defines them. Where a listed ratio does little for the decision, the interpretation can say so briefly, and one additional measure the question does need can sit beside the required set. Assigned measures are rarely optional, but the reading of them is where the analysis shows judgment.
Which return measure suits a private company?
Return on invested capital usually works best when debt levels differ between years or between the firm and its peers, because it measures the business before financing. Return on equity is still worth reporting for owners, since it is what they actually earn, but it moves with leverage and can rise while the operation itself weakens.
Should EBITDA appear in a strategic analysis?
As a leverage denominator, yes, because lenders write covenants on it. As a measure of performance it flatters capital-heavy firms by ignoring the equipment they must eventually replace. A precast producer with casting beds, cranes and trucks is better judged on operating income or returns, with EBITDA used where the bank itself uses it.