QUESTION 2 Tenderland Plc. has been trading in merchandise for several years in Garden City. The information below relates to the extracts from the financial statements for the past two years. Statement of Profit or loss and other comprehensive income for the year ended September 30. 2016 2015 ' Million 'Million Revenue 100,000 160.000 70,000 27,500 45,000 22,500 Gross Profit Administrative expenses Finance cost 1250 1250 10% Loan Note Interest 23750 28.750 21,250 41.250 8.000 Operating Profit before Tax Less: Taxation for the year Less: Operating Profit for the Year Dividends paid to Equity holders 16.000 25.250 13.250 6,050 8,550 Extract of statement of Financial Position as of September 30 2016 2015 ' Million ' Million Assets Non-Current Assets at Cost Less Accumulated Depreciation Carrying Amount 50,000 70,000 12.000 10.000 40.000 57.500 Current Assets Inventory Trade Receivables 32,500 20,000 4000 7,500 5,000 37.500 Bank Balance 56.500 96 500 Total Assets 50.000 107 500 23,000 Equity and Liabilities Ordinary Share Capital @ 50pence each Retained earnings 10% Loan notes 17,200 12,500 23,000 10,000 12,500 2000 47 500 10% Redeemable Preference Shares 52 700 Current Liabilities Trade Payables 7,500 10,750 16,000 Taxation 24,000 12 300 Bank Overdrafts 33.250 43.800 60,000 Total Equity and Liabilities 96.500 107 500 The Board of Directors were worried over the dwindling financial performance and precarious financial position of the Company. The company products were ageing: the economic depression biting harder as a result of the fluctuating exchange rate due to Brexit. The Company imports 60% of the goods sold in Garden City. The fluctuating exchange rate had affected the company's importation. Consequently, the revenue of the Company dropped significantly You are required to: A) Calculate the following ratios for the year ended September 30, 2015 and 2016 in Columnar form: Net Prafit from operations? * 100 capital employed i) Return on Capital Employed ii) Total Assets Turnover iii) Quick ratio current assets - Inventory iv) Debt Equity Ratio aument liability v) Fixed Interest cover wi) Earnings Yield Market price vii) Price Earnings Ratio Earnings' per shoone Vill) Dividend Yield Gross dividend share Market price per share (15 Marks) pes B). Write a brief and formal technical report to the Board of Directors to assess the performance, liquidity and stability of company using only: i) Return on Capital Employed ii) Total Assets Turnover ii) Quick Ratio iv) Fixed Interest Cover v) Debt Equity Ratio sales Total assets Current liabilities
