Question 6 : Ratio Analysis

The following information was obtained for le Sandy Ltd

Condensed Statement of profit or loss for the year ended September 30,

	2019	2020
	$M	$M
Turnover	490.00	585.00
Gross Profit	17.50	21.10
Interest	(1.98)	(1.98)
Profit before tax	15.52	19.12
Tax	(4.65)	(5.74)
Profit after tax	10.87	13.38
Dividends:
Ordinary	2.30	2.4
Preference	0.08	0.08
	(2.38)	(2.48)
Profit for the year	8.49	10.90
Retained earning b/d	22.90	29.70
Retained earning c/d	31.39	40.60
Market price per share	1.50	1.75

Condenced Statement of Financial Position as at September 30,

	2019	2020
	$M	$M
Non -current Assets	7.92	14.22
Net Current assets	54.17	57.08
Total Assets less current Liabilities	62.09	71.30
Capital and Reserves
Ordinary shares @$ 0.25	9.90	9.9
8% preference shares @$1 each	1.00	1.00
Retained earnings	31.39	40.6
Non-current Liabilities	19.80	19.80
	62.09	71.30

Required

Calculate and comment on the following ratios:

1. Gearing
2. Return on equity
3. EPS