Question
Question 3: The following summary extract information for the last 4 years relates to Liverpool Ltd, a UK wholesaler of components for the electronics industry:
Question 3:
The following summary extract information for the last 4 years relates to Liverpool Ltd, a UK wholesaler of components for the electronics industry:
| Extract information | 2017 | 2018 | 2019 | 2020 |
| Operating Profit after tax | 550,000 | 725,000 | 850,000 | 875,000 |
| Long term liabilities | 650,000 | 800,000 | 900,000 | 950,000 |
| Shareholders funds | 450,000 | 500,000 | 500,000 | 500,000 |
| Dividend per share | 3.00 | 4.00 | 5.00 | 6.00 |
| Market value per share | 2.50 | 3.25 | 4.50 | 5.00 |
| Weighted average cost of capital | 5% | 6% | 6% | 7% |
| Number of ordinary shares | 50,000 | 75,000 | 85,000 | 95,000 |
a. Prepare the financial report to explain the companys financial performance and position with six following supporting financial ratios in Board meetings:
I. Gearing
II. Dividend cover
III. Dividend yield
IV. Return on equity
V. Earnings per share
VI. Price/earnings ratio
State clearly the formulas used for each ratio and show ALL workings
(12 Marks)
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College Accounting A Practical Approach 1-15
Authors: Jeffrey Slater
4th Edition
013142050X, 978-0131420502
