Question:

Ratio Analysis

b) The following information is provided for Mvita Ltd

Ratio Analysis			2009		2010
	Cost	Deprec.	Net Book Value	Cost	Deprec.	Net Book Value
	Sh.'000'	Sh.'000'	Sh.'000'	Sh.'000'	Sh.'000'	Sh.'000'
Plant Building Investments at Cost Land Stock Debtors Bank Ordinary shares at Sh.20 each Share premium Revaluation Reserve Profit and Loss Account 10% Debentures Creditors Proposed Dividends Bank Profit & Loss Account Sales Cost of Sales Expenses Dividends Balance b/f Balance c/f	200 1,000	80 200	120 800 920 1,000 860 1,100 800 __60 4,740 800 240 500 2,000 800 400 ____ 4,740 4,000 2,000 2,000 1,200 800 400 400 100 500	220 1,800	100 220	120 1,580 1,700 1,600 1,260 1,300 1,000 ___- 6,860 1,000 280 400 500 3,000 1,200 400 __80 6,860 4,000 2,400 1,600 1,200 400 400 - 500 500

Required:

Calculate for Mvita Ltd. for 2009 and 2010 the following ratios:

1. Return on capital employed;
2. Debtors turnover;
3. Creditors turnover;
4. Current ratio;
5. Quick assets (acid test) ratio;
6. Gross profit ratio
7. Net profit percentage
8. Dividend cover
9. Gearing ratio.

Using the summarized accounts given and ratios you have just prepared, comment on the financial position and prospects of Mvita Ltd. (14 marks)