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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

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)

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