BUS10250 Financial Accounting Semester B 2019-2020 Take Home Assignment The following are the financial statements of E Ltd for the years ended 31 March 20x2 and 20x3. Balance sheets as at 31 December 20x3 $'000 20x2 $'000 $'000 $'000 Non current assets, ar net book value Current assets Stock Debtors Bank 290 240 140 120 55 Total assets Equity Share capital Reserves Long term liabilities 8% Debentures (issued in 20x0) Current liabilities Creditors Bank overdraft 110 250 Total equity and liabilities Income statements for the years ended 31 March $'000 20x3 $'000 1,700 $'000 20x2 $'000 1,500 Sales Opening stock Purchases 240 1.150 1,390 290 200 1.090 1,290 240 1.100 600 Less: Closing stock Cost of sales Gross profit Less: Operating and finance costs Net profit Taxation Net profit after taxation 340 260 1.050 450 270 180 20 160 30 230 REQUIRED: (a) Calculate to one decimal place the following ratios for E Limited for both years 20x2 and 20x3. Show workings. (64 marks) (1) Acid test ratio; (ii) Current ratio; (iii) Creditors' repayment period (in days); (iv) Debtors' collection period (in days); (v) Gearing ratio; (vi) Gross profit to sales percentage; (vii) Net profit (before interest and taxation) to sales percentage; and (viii) Return on capital employed Comment on the performance of E Limited over the two year period using the ratios calculated in (a) in terms of: (36 marks) (i) (ii) (iii) Liquidity Long term solvency/risk Profitability