5. Financial Accounts

Cumbrian Renewables Ltd is a UK based company that specialises in wind powered electricity generation. They have a large wind power generating plant and have been expanding their sales in response to increasing demands in the UK for electricity generation. They have an order book with 1 years worth of future sales. The UK demand for their products is so high that they have not focused on export sales as they work at capacity.

You should use Appendices A & B to answer the questions below.

Required:

1. The Gross Profit Margin for the year ending 31 December 2017 was 20%.

Calculate for the year ending 31 December 2017

1. Cost of Sales
2. Gross Profit
3. Operating Profit
4. Profit Before Tax
5. Profit After Tax
6. Tax
7. Retained Profit

2. Gross Profit Margin for the year end 2018

3. Return on Capital Employed, Operating Profit Margins and Dividend Yield Ratios for both years ending 31 December 2018 and 31 December 2017 (See Appendix B: show your workings)

4. Identify for each ratio which year has the better ratio and identify the percentage difference.

5. You are an adviser to a large German energy company, Renewable Power GmbH, who specialises in solar power. They are considering buying Cumbrian Renewables Ltd to give them expertise in wind power. You have been asked to look at the accounts of Cumbrian Renewables Ltd and evaluate their performance over the last two years. You should use the information from your answers to parts a) - d) above as well as any other relevant information to inform your report.

Appendices:

Appendix A. Income Statement refers to Question 5

Income statement Cumbrian Renewables Ltd year ending 31 December 2018
millions	Year Ending 31.12.18	Year Ending 31.12.17
Sales Revenue	11.80	10.80
Cost of Sales	9.20	?
Gross Profit	2.60	?
Expenses/Overheads	-1.20	-1.40
Extraordinary Item*	-0.50	0.00
Operating Profit	0.90	?
Finance costs	-0.15	-0.20
Profit Before Tax	0.75	?
Less Tax at 20%	-0.15	?
Profit after Tax	0.60	?
Dividends	-0.30	-0.25
Retained Profit	0.30	?
* fine for data protection breech
Additional Information
	31.12.18	31.12.17
Capital Employed	13,350,000	13,350,000
Dividend per share	120p	110p
Market Value per share	975p	795p

Appendix B Ratio table refers to Question 5:

Gross Profit Margin	Gross Profit Sales Revenue	%
Return on Capital Employed	Operating Profit	%
	Capital Employed
Operating Profit Margin	Operating Profit	%
	Sales Revenue
Dividend Yield	Dividend per share	%
	Market Value Per Share