AFE 5008-B Financial Accounting Assignment AFE 5008-B Financial Accounting Assignment AFE 5008-B Financial Accounting Assignment END OF QUESTION 2 Ratios Australia Ltd Paris Ltd Barcelona Ltd Statement of Profit or Loss Question 3: Return on capital employed (%) 28 34.3 Set out below are Statements of Financial Position at the end of October 2019 and 2020, and. also, Statement of Income for the year ended 31 October 2019 and 2020 for Barcelona Ltd. 2020 ,000 ,000 2019 ,000 ,000 Gross profit percentage (%) 12 19.6 Barcelona Ltd Statement of Financial Position 30,780 (21,600) 9,180 26,010 (18,225) 7,785 Operating profit percentage (%) 8.6 16.5 2020 ,000 2019 ,000 Revenue Cost of goods sold Gross profit Distribution costs: Depreciation Irrecoverable debt Advertising 587 637 276 ASSETS Non-current assets Machinery Investments 439 332 189 P/E ratio (times) 2.2 1.82 23.337 5,580 16,092 4,860 (1,500) (960) 28,917 20,952 Quick/Acid ratio (times) 1.3 1.23 Inventory Turnover period (days) 8.5 12 Current assets Inventory Trade receivables Cash 4,050 3,870 0 3,240 4,680 108 Administrative expenses: Operating profit Finance cost Profit before tax Income tax expenses Profit after taxation (3,108) 4,572 (468) 4,104 (1,170) 2,934 (2,010) 4,815 (405) 4,410 (1,260) 3,150 7,920 36,837 8,028 28,980 Gearing ratio (%) 42 Total assets 46 Earning per shares (pence) 61 78 EQUITY AND LIABILITIES Equity Share capital Revaluation reserve Other reserves Retained earnings Interest cover (times) 6.8 7.4 9,000 3,780 1,620 6,714 9,000 990 900 3,780 You Are Required to: a. Prepare a report to explain the company's financial performance and position with six supporting financial ratios for Board meetings. 21,114 14,670 4,860 5,400 4,680 5,400 c. Some accounting scholars believe that ratio analysis can only provide the restricted view of firm's financial performance and position". Discuss this statement with reference to examples. State clearly the formulae used for each ratio and show ALL workings Non-current liabilities Long-term loan Other loans Current liabilities Trade payables Bank overdraft Tax payable (12 Marks) 4,200 93 1,170 2,970 0 1,260 (5 Marks) Total equity and liabilities 5,463 36,837 4,230 28,980 TOTAL 25 Marks] b. Barcelona Ltd is considering the possibility of expanding its operations and has identified two firms in the same industrial sector as potential takeover targets. The following information about companies has been extracted from their most recent financial statements. Prepare a performance report of ratios for the two companies indicating which of the two companies you consider to be a better acquisition. In the report, besides given ratios, briefly discuss what other information might be useful in order to assist in the financial decision making relating to the takeover of Australia and Paris Ltd. END OF QUESTION 3 (8 Marks)