CAT TWO

Question

The summarized financial statements of Baraka Enterprises Ltd. are as follows:

	Income statements for the year ended 30 September:
	2013 Sh.000	2014 Sh.000
Sales Cost of sales Gross profit Administrative expenses Debenture interest Net profit	20,000 (15,000) 5,000 (3,800) - 1,200	28,000 (21,000) 7,000 (4,600) (400) 2,000
	Balance Sheet as at 30 September:
	2013 Sh.000	2014 Sh.000
Assets: Non-current assets (net book value) Current assets: Inventories Trade and other receivables Balance at bank Total assets	11,000 2,000 2,500 - 4,500 15,500	14,000 3,000 2,800 500 6,300 20,300
Equity and liabilities: Capital and reserves: Issued and fully paid 1,000,000 ordinary shares of Sh.10 each revenue reserves Non-current liabilities: 8% debentures Current liabilities: Trade and other payables Bank overdraft Total equity and liabilities Stock as at 1 October 2012 was Sh.5,000,000	10,000 3,000 13,000 - 1,500 1,000 2,500 15,500	10,000 4,100 14,100 5,000 1,200 - 1,200 20,300

Required:

For each year, calculate the following:

1. Gross profit margin (2 marks)
2. Inventory turnover (2 marks)
3. Return on equity (2 marks)
4. Return on assets (2 marks)
5. Acid test ratio (2 marks)
6. Current ratio (2 marks)