Below are the extracts of Meraviglia Ltds financial statements:
QUESTION 5 [25 MARKS] Below are the extracts of Meraviglia Ltd's financial statements: Statement of financial positions as at 30 September 2020 2019 $000 $000 Non-current assets 24,500 22,600 Current assets Inventory 2,500 2,350 Trade receivables 3,000 3,300 Bank 1,050 Assets classified as held for sale 7,000 12,500 6.700 Total assets 37,000 29,300 Equity and liabilities Equity shares of $1 each 15,000 15,000 Retained earnings 2 500 17,500 17.500 Non-current liabilities 7% loan notes 12.000 5,000 Current liabilities Bank overdraft 2,150 Trade payables 3,400 3,800 Tax payable 1,950 3,000 7.500 6,800 37,000 29,300 2,500 Statements of profit or loss for the year ended 30 September 2020 2019 $000 $000 Revenue 37,600 31,300 Cost of sales (28,500) (23,700) Gross profit 9,100 7,600 Operating expenses (3,900) (3,450) Finance costs (840) (350) Profit before tax 4,360 3,800 Tax expense (1.000) (800) Profit for the period 3,360 3.000 Meraviglia Ltd is a company operating in the production of foods which are supplied to hotels with rating above four. Due to the recent pandemic of Covid 19, the board has decided to close one of its divisions. The Chief Finance Officer has classified the assets of the division as held for sale since the criterion of IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations has been satisfied. The carrying amount of the assets classified as held for sale at 30 September 2019 was $ 7.3 million The following ratios have been calculated for Meraviglia Ltd for the year ended 30 September 2019 2019 Return on capital employed Gross profit margin Operating expenses to turnover Profit before interest and tax margin Net assets turnover Current ratio Quick ratio Inventory turnover Receivables days Payables days Gearing 27.3% 24.3% 11.0% 13.3% 1.93 times 0.99 0.64 36 days 38 days 59 days 22% REQUIRED (a) Calculate ratios for Meraviglia Ltd for the year ended 30 September 2020 equivalent to those calculated for the year ended 30 September 2019. [15 Marks) (b) Assess the financial performance and position of Meraviglia Ltd for the two years ended 30 September 2020 [10 Marks) QUESTION 5 [25 MARKS] Below are the extracts of Meraviglia Ltd's financial statements: Statement of financial positions as at 30 September 2020 2019 $000 $000 Non-current assets 24,500 22,600 Current assets Inventory 2,500 2,350 Trade receivables 3,000 3,300 Bank 1,050 Assets classified as held for sale 7,000 12,500 6.700 Total assets 37,000 29,300 Equity and liabilities Equity shares of $1 each 15,000 15,000 Retained earnings 2 500 17,500 17.500 Non-current liabilities 7% loan notes 12.000 5,000 Current liabilities Bank overdraft 2,150 Trade payables 3,400 3,800 Tax payable 1,950 3,000 7.500 6,800 37,000 29,300 2,500 Statements of profit or loss for the year ended 30 September 2020 2019 $000 $000 Revenue 37,600 31,300 Cost of sales (28,500) (23,700) Gross profit 9,100 7,600 Operating expenses (3,900) (3,450) Finance costs (840) (350) Profit before tax 4,360 3,800 Tax expense (1.000) (800) Profit for the period 3,360 3.000 Meraviglia Ltd is a company operating in the production of foods which are supplied to hotels with rating above four. Due to the recent pandemic of Covid 19, the board has decided to close one of its divisions. The Chief Finance Officer has classified the assets of the division as held for sale since the criterion of IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations has been satisfied. The carrying amount of the assets classified as held for sale at 30 September 2019 was $ 7.3 million The following ratios have been calculated for Meraviglia Ltd for the year ended 30 September 2019 2019 Return on capital employed Gross profit margin Operating expenses to turnover Profit before interest and tax margin Net assets turnover Current ratio Quick ratio Inventory turnover Receivables days Payables days Gearing 27.3% 24.3% 11.0% 13.3% 1.93 times 0.99 0.64 36 days 38 days 59 days 22% REQUIRED (a) Calculate ratios for Meraviglia Ltd for the year ended 30 September 2020 equivalent to those calculated for the year ended 30 September 2019. [15 Marks) (b) Assess the financial performance and position of Meraviglia Ltd for the two years ended 30 September 2020 [10 Marks)
