5. The summary of the balance sheets and the profit and loss accounts from 20X1 to 20X5 for Jagan Limited is given in Tables 25.36 and 25.37. During this period, the company undertook a major expansion programme. You are required to calculate important ratios for the five years and assess the financial health of the company. Also, explain the implications of the development of the financial health of the company for the shareholders.

Table 25.36: Jagan Ltd Balance Sheets '000) 20X3 20X4 20X5 20X1 20X2 20X3 20X4 Liabilities and Equity Creditors 25 25 25 25 25 Debentures 250 1,000 1,750 2,500 3.250 Share capital 1,000 1,000 Reserves Total 1,000 1,000 1,000 1,000 225 225 1,500 2,250 3,000 1,000 1,000 1,000 225 225 225 3,750 4,500 Asset Cash. 50 50 50 50 50 Debtors 50 50 50 50 50 Stock 400 650 900 11,50 1,400 Fixed assets, net1,000 1,500 2,000 2,500 3,000 Total 1,500 2,250 3,000 3,750 4,500 Table 25.37: Jagan Ltd Profit and Loss Accounts (Summary) '000) 20X1 20X2 20X3 20X4 20X5 Sales 300 450 600 750 900 Cost of goods sold 100 150 200 250 300 Gross profit Operating expenses 25 200 300 400 500 600 50 100 150 200 EBIT 175 250 300 350 400 Interest 15 67.5 127.5 195 270 Profit before tax 160 182.5 172.5 155 130 Tax 67.55 75.35 73.55 65.15 53.1 Net profit 92.45 107.15 98.95 89.85 76.9 No. of shares 100 100 100 100 100 P/E ratio 5 5 4 3.5 3.5