Required: a) For both 2010 and 2011, calculate the ratios below, to ONE DECIMAL PLACE. i. Acid test ratio ii. Return on Total assets iii. Return on Equity iv. Operating profit percentage v. Inventory holding period vi. Trade payables payment period vii. Interest cover viii. Gearing ratio 10 Marks b) Comment on the performance of Safe & Sound Ltd. over the two-year period in the light of the ratios in a) above ensuring they relate to the efficiency, profitability, liquidity and leverage of the firm. 25 Marks Total 35 Marks Required: a) For both 2010 and 2011, calculate the ratios below, to ONE DECIMAL PLACE. i. Acid test ratio ii. Return on Total assets iii. Return on Equity iv. Operating profit percentage v. Inventory holding period vi. Trade payables payment period vii. Interest cover viii. Gearing ratio 10 Marks b) Comment on the performance of Safe & Sound Ltd. over the two-year period in the light of the ratios in a) above ensuring they relate to the efficiency, profitability, liquidity and leverage of the firm. 25 Marks Total 35 Marks Required: a) For both 2010 and 2011, calculate the ratios below, to ONE DECIMAL PLACE. i. Acid test ratio ii. Return on Total assets iii. Return on Equity iv. Operating profit percentage v. Inventory holding period vi. Trade payables payment period vii. Interest cover viii. Gearing ratio 10 Marks b) Comment on the performance of Safe & Sound Ltd. over the two-year period in the light of the ratios in a) above ensuring they relate to the efficiency, profitability, liquidity and leverage of the firm. 25 Marks Total 35 Marks Q1. Financial Statement Analysis You have been given the following two years of financial statements for Safe & Sound Ltd. Income Statement for year-end 2011 2010 2011 000 000 Revenue Cost of Goods Sold Gross Profit 29,682 (21.051) 8,631 35,140 (22.214) 12.296 (4.426) (5,795) Distribution costs Admin expenses Profit from operations Finance Costs Profit before Tax Tax Profit for the period (2.614) 1,590 (795) 795 (335) 460 (2.181) 4,951 (1.329) 3,621 (636) 2.986 Statement of Financial Position as at 2011 2011 2010 ASSETS Non-Current Assets - Property, Plant & Equipment 23,507 26,719 Current Assets Inventories Trade Receivables Cash 1,501 3,467 2,356 4,200 334 6.890 30.396 448 5,416 TOTAL ASSETS 32.135 EQUITY & LIABILITIES Equity Ordinary Share Capital Retained Earnings 10,000 815 10.815 10,000 1.275 11.275 Non-Current Liabilities - Bank loan 18,333 14,000 Current Liabilities Trade Payables Tax Liabilities TOTAL EQUITY AND LIABILITIES 813 435 6,224 636 32.135 30.396 Required: a) For both 2010 and 2011, calculate the ratios below, to ONE DECIMAL PLACE. i. Acid test ratio ii. . Return on Total assets iii. . Return on Equity iv. Operating profit percentage V. Inventory holding period vi. Trade payables payment period vii. . Interest cover viii. . Gearing ratio 10 Marks b) Comment on the performance of Safe & Sound Ltd. over the two-year period in the light of the ratios in a) above ensuring they relate to the efficiency, profitability, liquidity and leverage of the firm. 25 Marks Total 35 Marks Required: a) For both 2010 and 2011, calculate the ratios below, to ONE DECIMAL PLACE. i. Acid test ratio ii. Return on Total assets iii. Return on Equity iv. Operating profit percentage v. Inventory holding period vi. Trade payables payment period vii. Interest cover viii. Gearing ratio 10 Marks b) Comment on the performance of Safe & Sound Ltd. over the two-year period in the light of the ratios in a) above ensuring they relate to the efficiency, profitability, liquidity and leverage of the firm. 25 Marks Total 35 Marks Required: a) For both 2010 and 2011, calculate the ratios below, to ONE DECIMAL PLACE. i. Acid test ratio ii. Return on Total assets iii. Return on Equity iv. Operating profit percentage v. Inventory holding period vi. Trade payables payment period vii. Interest cover viii. Gearing ratio 10 Marks b) Comment on the performance of Safe & Sound Ltd. over the two-year period in the light of the ratios in a) above ensuring they relate to the efficiency, profitability, liquidity and leverage of the firm. 25 Marks Total 35 Marks Required: a) For both 2010 and 2011, calculate the ratios below, to ONE DECIMAL PLACE. i. Acid test ratio ii. Return on Total assets iii. Return on Equity iv. Operating profit percentage v. Inventory holding period vi. Trade payables payment period vii. Interest cover viii. Gearing ratio 10 Marks b) Comment on the performance of Safe & Sound Ltd. over the two-year period in the light of the ratios in a) above ensuring they relate to the efficiency, profitability, liquidity and leverage of the firm. 25 Marks Total 35 Marks Q1. Financial Statement Analysis You have been given the following two years of financial statements for Safe & Sound Ltd. Income Statement for year-end 2011 2010 2011 000 000 Revenue Cost of Goods Sold Gross Profit 29,682 (21.051) 8,631 35,140 (22.214) 12.296 (4.426) (5,795) Distribution costs Admin expenses Profit from operations Finance Costs Profit before Tax Tax Profit for the period (2.614) 1,590 (795) 795 (335) 460 (2.181) 4,951 (1.329) 3,621 (636) 2.986 Statement of Financial Position as at 2011 2011 2010 ASSETS Non-Current Assets - Property, Plant & Equipment 23,507 26,719 Current Assets Inventories Trade Receivables Cash 1,501 3,467 2,356 4,200 334 6.890 30.396 448 5,416 TOTAL ASSETS 32.135 EQUITY & LIABILITIES Equity Ordinary Share Capital Retained Earnings 10,000 815 10.815 10,000 1.275 11.275 Non-Current Liabilities - Bank loan 18,333 14,000 Current Liabilities Trade Payables Tax Liabilities TOTAL EQUITY AND LIABILITIES 813 435 6,224 636 32.135 30.396 Required: a) For both 2010 and 2011, calculate the ratios below, to ONE DECIMAL PLACE. i. Acid test ratio ii. . Return on Total assets iii. . Return on Equity iv. Operating profit percentage V. Inventory holding period vi. Trade payables payment period vii. . Interest cover viii. . Gearing ratio 10 Marks b) Comment on the performance of Safe & Sound Ltd. over the two-year period in the light of the ratios in a) above ensuring they relate to the efficiency, profitability, liquidity and leverage of the firm. 25 Marks Total 35 Marks