B13.2 The following financial statements relate to Charity plc:

Note: The directors have recommended a dividend of 11.4 pence per share in total in respect of Year 4, to be paid following approval at the next annual general meeting.

Required

(a) Calculate ratios which measure:
(i) liquidity and the use of working capital;
(ii) management performance; and (iii) gearing.

(b) Explain how each ratio would help in understanding the financial position and results of the company.

(c) The market price of one share is 800 pence. Calculate ratios which will be of interest to investors.

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Revenue Cost of sales Income statement (profit and loss account) for year ended 30 September Year 4 Gross profit Administration and selling expenses Operating profit Debenture interest Profit before taxation Taxation Profit for equity holders 000s 000s 2,480 (1,100) 1,380 (678) 702 (31) 671 (154) 517