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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:

  1. i) Profitability Ratios

  2. 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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