Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following are the financial statements of E Ltd for the years ended 31 March 20x2 and 20x3. Balance sheets as at 31 December 20x3
The following are the financial statements of E Ltd for the years ended 31 March 20x2 and 20x3. Balance sheets as at 31 December 20x3 20x2 $000 $000 $000 $000 Non current assets, at net book value 280 315 Current assets Stock 290 240 Debtors 140 120 Bank 55 0 485 360 360 Total assets 765 675 Equity Share capital 100 100 Reserves 315 85 415 185 Long term liabilities 8% Debentures (issued in 20x0) 240 240 Current liabilities Creditors 110 100 Bank overdraft 0 150 110 250 110 250 Total equity and liabilities 765 675 Income statements for the years ended 31 March 20x3 20x2 $000 $000 $000 $000 Sales 1,700 1,500 Opening stock 240 200 Purchases 1,150 1,090 1,390 1,290 Less: Closing stock 290 240 Cost of sales 1,100 1,050 Gross profit 600 450 Less: Operating and finance costs 340 270 Net profit 260 180 Taxation 30 20 Net profit after taxation 230 160 REQUIRED: (a) Calculate to one decimal place the following ratios for E Limited for both years 20x2 and 20x3. Show workings. (64 marks) (i) Acid test ratio; (ii) Current ratio; (iii) Creditors repayment period (in days); (iv) Debtors collection period (in days); (v) Gearing ratio; (vi) Gross profit to sales percentage; (vii) Net profit (before interest and taxation) to sales percentage; and (viii) Return on capital employed (b) Comment on the performance of E Limited over the two year period using the ratios calculated in (a) in terms of: (36 marks) (i) Liquidity (ii) Long term solvency/risk (iii) Profitability Income statements for the year ended 31 March The following are the financial statements of Lad for the years ended 31 March 20x2 and 2023, Balance sheets as at 31 December 2011 20x2 S'000 S'000 5000 Sales S000 1,700 1,500 S'000 000 Opening stock Purchases 200 1080 a book S'000 315 once Current Stoch 240 105 450 Rank Le Closing stock Cost of sales Cirs profit Lar: Operating and finance costs Net profit Taxation Net profit after taxation 180 Total assets REQUIRED Share capital Reserves Calculate to one decimal place the following ratios for and 20 Show working Limited for both years 2022 (64mark) Long Naine 8% Debentures issued in 2010) Carrer Bar Creators Bank overdraft 293 ( 0 (1) (II) (iv) (v) (vi) (vii) (vill) Acid tem ratio Current ratio Creditors' repayment period in days) Debtors' collection period (in days Cearing rate Gross profit to sales percentage Net profit before interest and taxation) to sales percentage and Return on capital employed Total equiry and liabilities Comment on the performance of E Limited over the two year period using the ratios calculated in (a) in terms of (36 marks) (1) Liquidity (1) Long term solvency/risk fiii) Profitability Web st
The following are the financial statements of E Ltd for the years ended 31 March 20x2 and 20x3.
Balance sheets as at 31 December
20x3 20x2
$000 $000 $000 $000
Non current assets, at net book value 280 315
Current assets
Stock 290 240
Debtors 140 120
Bank 55 0
485 360 360
Total assets 765 675
Equity
Share capital 100 100
Reserves 315 85
415 185
Long term liabilities
8% Debentures (issued in 20x0) 240 240
Current liabilities
Creditors 110 100
Bank overdraft 0 150
110 250
110 250
Total equity and liabilities 765 675
Income statements for the years ended 31 March
20x3 20x2
$000 $000 $000 $000
Sales 1,700 1,500
Opening stock 240 200
Purchases 1,150 1,090
1,390 1,290
Less: Closing stock 290 240
Cost of sales 1,100 1,050
Gross profit 600 450
Less: Operating and finance costs 340 270
Net profit 260 180
Taxation 30 20
Net profit after taxation 230 160
REQUIRED:
(a) Calculate to one decimal place the following ratios for E Limited for both years 20x2 and 20x3. Show workings. (64 marks)
(i) Acid test ratio;
(ii) Current ratio;
(iii) Creditors repayment period (in days);
(iv) Debtors collection period (in days);
(v) Gearing ratio;
(vi) Gross profit to sales percentage;
(vii) Net profit (before interest and taxation) to sales percentage; and
(viii) Return on capital employed
(b) Comment on the performance of E Limited over the two year period using the ratios calculated in (a) in terms of: (36 marks)
(i) Liquidity
(ii) Long term solvency/risk
(iii) Profitability
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started