22.7 Net current assets 1,035 110 2,235 1,070 10% Debenture loan

—

300 2,235 770

£000

£000 Share capital and reserves Issued share capital 1,500 500 Reserves 735 270 2,235 770 Required:

Using the above information, calculate appropriate ratios and comment on the performance and financial position of the two companies.

The following are summaries of the financial statements of Hopwood Ltd for the past two years:

Profit and loss accounts Year ended Year ended 31 Dec. 20X2 31 Dec. 20X3

£000

£000 Sales 8,800 12,800 Less: Cost of goods sold 6,440 10,360 Gross profit 2,360 2,440 Less: Expenses 1,480 1,640 Operating profit 880 800 Less: Interest payable 320 320 Profit before tax 560 480 Corporation tax 160 120 Profit after tax 400 360 Unappropriated profit brought forward 1,400 1,120 1,800 1,480 Dividends 680 400 Unappropriated profit carried forward 1,120 1,080 Balance sheets 31 Dec. 20X2 31 Dec. 20X3 Fixed assets £000 £000 £000 £000 Land and buildings 1,760 1,840 Machinery and vehicles 2,160 2,360 3,920 4,200 Current assets Stock 3,360 3,880 Debtors 2,600 2,240 Cash 480 160 ;ss: Current liabilities 6,440 6,280 Creditors 1,240 1,400 Net current assets 5,200 4,880 Total assets less current liabilities 9,120 9,080 10% Debenture loan 3,200 3,200 5,920 5,880 Ordinary share capital 4,800 4,800 Retained profits 1,120 1,080 5,920 5,880 Required:
Using appropriate ratios, report on the performance and financial situation of Hopwood Ltd.