CONFIDENTIAL & RESTRICTED Question 1 The Chief Executive Officer (CEO) of All-Funders PLC (An Agricultural commodity producer) needs to seek further funding for his regional expansion plan, by presenting the company's financial performance and standing to potential investors. Presented below are the summarized accounts for All-Funders PLC. All-Funders PLC Income statement for the year ended 31 December 2020 $ood Revenue 12,750 Cost of sales (11,000) Gross Profit 1,750 Selling, Distribution and Administrative expenses 250 Profit from operations 1,500 Finance cost 2,500) Profit/(Loss) before tax (1,000) Tax expense (200) * Net profit for the period (1,200 *: Tax payable represents a minimum tax expense levied on organisations that operate within All Funder's PLC nature of business All-Funders PLC Statement of Financial Position as at 31 December 2020 $000 $000 Assets Non-Current Assets Other financial assets 320 Property, plant and equipment 5,570 Total non-current assets 5,890 Current Assets Cash and cash equivalents 700 Trade and other receivables 170 Inventories 1,440 Total current assets 2,310 Total Assets 8,20 Current Liabilities and other pay 1 000 Total current liabilities 1.000 Non-current liabilities Long term borrowings 5500 Total non-current liabilities 5,500 Total liabilities 6,500 Equity Share capital 1000 Retained earnings 700 Total equity 1,700 Total liabilities and equity 8 200CONFIDENTIAL & RESTRICTED The opening balances of total assets. Liabilities and equities at the beginning of the year are also provided: Total assets ($000) Total Liabilities ($000) Total Equities ($000 6,860 2,370 1,900 a. In addition to the financial statements presented above, key financial ratios indicating the profitability, efficiency and liquidity of the company for the past year has been compiled, together with their respective industry averages for benchmarking. Calculate the ratio values for All-Funders PLC for the year ended 31 Dec 2020 as follows: Ratios Historical Data Industry Average 2019 2020 2020 Operating Profit Margin (%) 30.5 31.5 Return on Total Assets (%) 128 104 Quick/Acid Test ratio (%) 1.01 1.4 Times Interest Earned (times) 3.8 3.9 Debt ratio (%) 0.50 0.82 5 marks) b. Interpret the following ratios of for All-Funders PLC for the year ended 31 Dec 2020. i. Operating Profit Margin ii. Return on Total Assets ini. Quick/Acid test ratio iv . Times interest earned V. Debt ratio (15 marks) C. Explain FIVE general limitations of financial ratio analysis to the CEO