Set out in Figure 17.11 are summarized balance sheets and income statements for F Co. for 20X1 and 20X2.

You are required to:

(a) prepare a table of ratios, covering all aspects of interpretation as far as the information allows, for each of the two years.

(b) consider the following statement: ‘The situation of the business has got worse, and anyone owning ordinary shares in F Co. would be advised to sell them as soon as possible.’ Write a report explaining fully whether you agree or disagree, and why.

Transcribed Image Text:

Figure 17.11 Financial statements for F Summarized balance sheets at year end (m) Non-current assets Tangible - not yet in use - in use Investments Loan redemption fund Current assets Inventory Debtors - trade - other Bank Cash Creditors due within one year -trade - other Net current liabilities 20x2 44 20X1 49 41 295 237 344 278 1 1 1 1 346 Total assets less current liabilities Creditors - due between one and five years 41 11 42 22 44 8525 56 8224 54 280 60 60 87 112 147 172 93 116 253 164 61 1 4 3 188 160 Provision for liabilities and charges Net assets Capital and reserves Ordinary shares of 0.1 each 19 19 Preference shares of 1 each 46 46 Share premium 1 1 Profit and loss account 122 94 188 160