QUESTION 7 As a newly employed Accountant of Peace Limited, you have been presented with the financial statements as follows: (3,000) Statement of Comprehensive Income for the year ended 31st December 2017 2016 E E Net Tumover 456,500 420,000 Cost of Sales (295,000) (227,000) Gross Profit 161,500 193,000 General, Admin and Selling Expenses (109,500) (93.000) Operating profit 52,000 100,000 Debenture Interest Expenses (14,500) Investment Income 5.000 4,500 Profit before tax 42,500 101,500 Corporate Tax (12,500) (15,000) Profit after tax 30.000 86,500 149.500 89.500 Statement of income surplus Balance b/f 30,000 86,500 Net Profit 179,500 176,000 Dividend: Preference Shares (10,000) (9,000) Ordinary Shares (12.000) (17.500) 157.500 149.500 Statement of Financial Position as at 31st December: 2017 2016 E E E Assets Goodwill 10,000 5,000 Tangible Fixed Assets 106,000 132,000 Inventories 147,000 118,500 Accounts Receivable 80,000 24,000 Bank and Cash on hand 26,000 28,500 369,000 308,000 Liabilities: Accounts Payable 37,500 26,500 Accruals 25,500 20,000 Debentures 58,500 37,000 Stated Capital Preference Shares 40,000 25,000 Ordinary Shares 50,000 50,000 Income Surplus 157.500 149.500 369.000 308.000 Required: a) Compute for the two years the following ratios: i. Return on Capital Employed Fixed Asset Tumover Current ratio iv. Debt/Equity Ratio V. Interest Cover