Question
TASK A The statements of financial position of XZY PLC, a company trading as a wholesaler, as at 31st December 2020 and 2019 were as
TASK A
The statements of financial position of XZY PLC, a company trading as a wholesaler, as at 31st December 2020 and 2019 were as follows:
2020 | 2019 | |||
$ 000 | $ 000 | $ 000 | $ 000 | |
Assets | ||||
Non-current assets | ||||
Cost or valuation | 374,800 | 287,600 | ||
Accumulated depreciation | (128,000) | 246,800 | (100,000) | 187,600 |
Current assets | ||||
Inventories | 35,000 | 24,000 | ||
Accounts trade receivable | 30,000 | 21,000 | ||
Cash | 4,000 | 69,000 | 2,800 | 47,800 |
Total Assets | 315,800 | 235,400 | ||
Equity and liabilities | ||||
Ordinary shares of $1 each | 120,000 | 100,000 | ||
Share premium account | 16,000 | 2,000 | ||
Revaluation surplus | 16,000 | |||
Retained earnings | 46,500 | 198,500 | 28,000 | 130,000 |
Non- current liabilities | ||||
Loan | 70,000 | 62,000 | ||
Current liabilities | ||||
Accounts trade payable | 39,800 | 36,600 | ||
Taxation payable | 7,500 | 47,300 | 6,800 | 43,400 |
Total equity and liabilities | 315,800 | 235,400 |
The statements of profit or loss for the years ended 31st December 2020 and 2019 were:
2020 | 2019 | |
$ 000 | $ 000 | |
Sales revenues | 266,000 | 178,000 |
Cost of sales | (151,200) | (80,000) |
Gross profit | 114,800 | 98,000 |
Distribution costs (28,000) (30,000)
Administrative expenses | (40,000) | (36,000) |
Operating Profit | 46,800 | 32,000 |
Finance costs interest on loans | (7,000) | (7,000) |
Profit before tax | 39,800 | 25,000 |
Tax expense | (15,000) | (10,500) |
Profit for the year | 24,800 | 14,500 |
Task A - Question
You are required to:
A. Using the above financial statements and additional information of XYZ PLC, calculate appropriate ratios under the following listed categories:
-
i) Profitability Ratios
-
ii) Liquidity Ratios
iii) Gearing Ratios
(6 RATIOS x 0.5 MARKS=3 Marks)
B. Evaluate the performance and state the concerns of the key stakeholder groups using the ratios calculated above in (A). You are required to provide proper reasons which could cause the movement in the ratio figures of 2020 as compared to 2019 and also state suggestions for improvement wherever applicable.
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