Question 3 Covid Foods Ghana Limited is a manufacturer and distributor of high quality immune busting foods for the management of Covid cases in Ghana. The companys products are usually patronised by all the major Hospitals across the continent. Relief agencies across the continent are granted special discount on all purchased meant for distribution in troubled and deprived regions of Africa. In January 2018, the company was taken over in a management buy-out precipitated by the previous owners plan to downsize and introduce robotics into the manufacturing process. At a recent meeting to discuss the financial performance and position of the organisation, the current Managing Director remarked that the company is enjoying the best financial performance in the industry. Below are the financial statements of the first two years of operation which formed the basis of the Managing Directors comment. Statement of profit or loss and other comprehensive income for the year ended December 31st 2019 2018 Gh000 Gh000 Sales 8,700 5,220 Cost of sales (3,920) (2,871) Gross profit 4,780 2,349 Distribution Costs (590) (510) Administrative expenses (1,930) (1,070) Operating profit 2,260 769 Finance cost (450) (220) Net profit before tax 1,810 549 Taxation (362) (80) Profit after tax 1,448 369 Dividend proposed and paid (525) (210) Retained Earnings 923 159 Statement of financial position as at 2019 2018 Non-current assets Property, plant and equipment 5,200 4,400 Current assets Inventories 930 800 Trade receivables 942 830 Cash at bank 1,755 120 3,627 1,750 Total Assets 8,827 6,150 Equity and Liabilities Equity Share capital 2,000 2,000 Retained Earnings 1,082 159 3,767 2,159 Non-current liabilities Debenture 4,685 2,660 Current liabilities Trade payables 685 1,251 Taxation 375 80 1,060 1,331 Total equity and liability 8,827 6,150 The following additional information is available 2016 2018 i. The number of shares in issue 2,000,000 2,000,000 ii. Proposed and paid dividend Gh525,000 Gh210,000 iii. Dividend per share 26.25Gp/Share 10.50 Gp/Share iv. Market price per share (assumed) Gh25.34/share Gh14.76/share Required: You have been nominated as a management member and tasked to provide explanation for the comments of the Managing Director. Using the information provided about the company, a. Calculate Ten (10) ratios necessary to answer question (b) below; 5 marks b. Write a report to the Management of the company evaluating the financial performance and position of the company over the two years. 15 marks (Total: 20 marks)

assess the factors you identified in (1) above. 8 marks (Total: 30 Marks) Question 3 Covid Foods Ghana Limited is a manufacturer and distributor of high quality immune busting foods for the management of Covid cases in Ghana. The company's products are usually patronised by all the major Hospitals across the continent. Relief agencies across the continent are granted special discount on all purchased meant for distribution in troubled and deprived regions of Africa. In January 2018, the company was taken over in a management buy-out precipitated by the previous owners' plan to downsize and introduce robotics into the manufacturing process. At a recent meeting to discuss the financial performance and position of the organisation, the current Managing Director remarked that the company is enjoying the best financial performance in the industry". Below are the financial statements of the first two years of operation which formed the basis of the Managing Director's comment Statement of profit or loss and other comprehensive income for the year ended December 31 2019 2018 Gh QN0 Gh 000 Sales 8,700 5.220 Cost of sales (3.920) (2,871) 4,780 2.349 (590) (510) (1.930) (1.070) Gross profit Distribution Costs Administrative expenses Operating profit Finance cost Net profit before tax 2,260 769 (450) (220) 1,810 549 Taxation (362) (80) Profit after tax 1,448 369 Dividend proposed and paid (525) (210) Retained Earnings 923 159 Page 6 of 7 Statement of financial position as ar 2019 2018 Non-current assets Property, plant and equipment 5,200 4,400 Current assets Inventories 930 800 Trade receivables 942 830 Cash at bank 1,755 120 3,627 1,750 Total Assets 8.827 6,150