should fund its ex! Ignore taxation P21-3 You have secured an internship as a financial journalist with a newspaper and one of your tasks is to analyse the financial statements of small, newly listed companies. The Cake Stand Ltd is a company that bakes and distributes a range of cakes to coffee shops and other food outlets. There is no inventory as all baked items are either sold daily or donated to charity You have examined the financial statements of the company and prepared the following extracts to aid with your analysis: THE CAKE STAND LTD SUMMARISED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MARCH 20X7 20X7 20X6 Sales 2 000 000 1 800 000 Cost of sales (1 100 000) (1 080 000) Gross profit 900 000 720 000 Operating expenses (617 500) (491 500 Operating profit 282 500 228 500 Finance costs (12 500) (12 500) Profit before tax 270 000 216 000 Taxation (54000) (43 200) Profit for the period 216 000 172 800 20X6 20X7 C THE CAKE STAND LTD EXTRACT FROM STATEMENT OF FINANCIAL POSITION AT 31 MARCH 20X7 800 000 700 000 Non-current assets Equipment 136 100 177 500 233 400 1 247 000 133 500 100 000 68 000 1 101 500 Current assets Supplies Accounts receivable Bank 744 000 870 000 313 Equity Won-current liabilities Borrowings 250 000 250 000 Current liabilities Accounts payable 127 000 1 247 000 107 500 1101500 THE CAKE STAND LTD DIVIDEND AND SHARE INFORMATION FOR THE YEAR ENDED 31 MARCH 20X7 20X7 20X6 Dividend paid Number of ordinary shares in issue Market price per share at end of year C90 000 1 200 000 C2,54 C80000 1 200 000 C1,71 THE CAKE STAND LTD KEY RATIOS FOR THE YEAR ENDED 31 MARCH 20X6 3) ti) v) Gross profit percentage Earnings per share (EPS) Price: earnings (PE) ratio Dividend yield Return on capital employed Current ratio Accounts receivable collection period Accounts payable payment period Gearing ratio Interest cover 20X6 40% C0.14 12,2 3,9% 22.,9% 2,8:1 20 days 36 days 33.,6% 18 times vi) vii) viii) ix) You are required to: . Calculate the following ratios for the 20x7 year only: 0 Gross profit percentage ii) Earnings per share (EPS) iii) Price: earnings (PE) ratio iv) Dividend yield V) Return on capital employed vi) Current ratio vii) Accounts receivable collection period viii) Accounts payable payment period ix) Gearing ratio x) Interest cover . Briefly comment on each of the above ratios of The Cake Stand Ltd