The following information is available from the financial statements of Halco Plc.
The following information is available from the financial statements of Halco Plc. Summarised income statement for the year ended 31 December 2019 Summarised statement of financial position as at 31 December 2019 Rs 000 Rs 000 Non-current assets Property Plant and Equipment 4,200 Current assets Inventory Trade receivables Cash and cash equivalents Total assets 1,760 960 20 2,740 6,940 Equity and liabilities Equity 2,000,000 Ordinary shares of Rs 1 each Retained earnings 2.000 3,300 5,300 Non current liabilities Debentures 1,000 Current liabilities Trade payables Total equity and liabilities 640 6,940 Other information about Halco plc is as follows: 1. All sales and purchases are on credit 2. The dividends paid in the year amounted to Rs 880,000 REQUIRED (a) Using the above information calculate the following ratios 0 Gross profit margin (1) Net profit margin (ii) Current ratio (iv) Debtors days'/trade receivable turnover (v) Gearing ratio (vi) Dividend cover [12 Marks] The following information ratios are also available about Halco plc previous year's performance Gross profit margin 60% Net profit margin 16% Gearing ratio 10% Dividend cover 1.5 times REQUIRED (b) Using the ratios calculated in part (a) and the ratios provided in the above table comment on the performance of Halco pic [13 marks) (c) State three importance of calculating ratios. 13 Marks) (d) State two limitations of ratios analysis. [2 Marks) The following information is available from the financial statements of Halco Plc. Summarised income statement for the year ended 31 December 2019 Summarised statement of financial position as at 31 December 2019 Rs 000 Rs 000 Non-current assets Property Plant and Equipment 4,200 Current assets Inventory Trade receivables Cash and cash equivalents Total assets 1,760 960 20 2,740 6,940 Equity and liabilities Equity 2,000,000 Ordinary shares of Rs 1 each Retained earnings 2.000 3,300 5,300 Non current liabilities Debentures 1,000 Current liabilities Trade payables Total equity and liabilities 640 6,940 Other information about Halco plc is as follows: 1. All sales and purchases are on credit 2. The dividends paid in the year amounted to Rs 880,000 REQUIRED (a) Using the above information calculate the following ratios 0 Gross profit margin (1) Net profit margin (ii) Current ratio (iv) Debtors days'/trade receivable turnover (v) Gearing ratio (vi) Dividend cover [12 Marks] The following information ratios are also available about Halco plc previous year's performance Gross profit margin 60% Net profit margin 16% Gearing ratio 10% Dividend cover 1.5 times REQUIRED (b) Using the ratios calculated in part (a) and the ratios provided in the above table comment on the performance of Halco pic [13 marks) (c) State three importance of calculating ratios. 13 Marks) (d) State two limitations of ratios analysis. [2 Marks)
