Noom Moon Plc All values in AED Millions Income statement for the year ended 31st Dec 2022

	2020	2021	2022
Turnover	786	841	900
Cost of Sales	503	563	630
Gross Profit	283	278	270
Admin Costs	109	122	137
Net Profit	174	156	133
Dividends	50	80	80
Retained Earnings	124	76	53

Statement of Financial Position as at 31st Dec 2022

	2020	2021	2022
Non-Current Assets	477	832	890
Current Assets	262	281	300
Total Assets	739	1,113	1,190
Current Liabilities	154	192	93
Non-Current Liabilities	100	412	412
Ordinary Shares	350	350	350
Retained Profits	135	259	335
	739	1,113	1,190

Sector average ratios: Return on capital employed 18%

Net profit margin 22%

Current ratio 1.3 Times

Debt/equity ratio (book value basis) 45%

Return on equity 18%

Question 1

Required: 1.1 Calculate the following ratios for Madeira Plc: CLO 3 Gross Profit Margin Net Profit Margin Net Asset Turnover Receivable Days Payable Days Return on Capital Employed Debt / Equity Ratio Return on Equity

1.2 Comment on the financial performance of Noom Moon Plc between the years 2020 and 2022 using the ratios above and any other financial measure you feel appropriate. CLO 3

1.3 In 2020 the share price of Noom Moon was 10 AED per share. Today the share price is 21 AED per share. Critically evaluate if you believe the directors of Noom Moon Plc are maximizing the wealth of shareholders. What other goals might the company consider? CLO 3

Question 2 2.1 Noom Moon Plc has an ambitious plan to invest 100 Billion AED in the next 30 years. Explain how the company might fund such an ambitious investment plan. You are required to evaluate the benefits and drawbacks of equity finance and debt finance from the companys perspective. CLO 6

2.2 Summarize the (theoretical) costs of each type of finance available to the company when funding its investment appraisal in the future. What are the relative costs of retained earnings compared with raising new finance via the debt and equity financial markets. CLO 2