Using 2019-2020 financial reports of ABC,
a) Calculate debt to equity (use debt items only) and liabilities to equity ratios FOR 2020 ONLY. Show calculations.
b) Comment on solvency position of the company in 2020. Support your comments with the ratios you calculated in (a). (min. 30 words,
c) If you were a bank manager, would you give long term loan to this company? Discuss. (min. 50 words,
Followings are extracted from year 2020 annual financial report of ABC company listed in Boursa Kuwait. Consolidated Statement of Income for the year ended 31 December 2020 (All amounts are in Kuwaiti Dinars) Note 2019 19 20 2020 42,465,225 (54,444,578) (11,979,353) 261,864 (3,660,777) (15,378,266) (4,128,659) (2,446,177) 25,905 2,656,230 1,087,195 (18,183,772) Sales Cost of sales Gross (loss)/ profit Other operating income Selling, general and administrative expenses Operating (loss)/profit Provision for expected credit losses Finance charges Interest income Net investment profits Group's share of results of associates Net (loss)/ profit before deductions Contribution to Kuwait Foundation for the Advancement of Sciences National Labour Support Tax Zakat Net (loss)/profit for the year 11 81,819,157 (74,033,079) 7,786,078 429,353 (4,028,725) 4,186,706 (249,475) (3,043,437) 3,550 3,105,231 135,338 4,137,913 (39,370) (63,776) (18,593) 4,016,174 21 7 (18,183,772) Consolidated Statement of Financial Position as at 31 December 2020 (AN amounts are in Kuwaiti Dinars) Note 2020 2019 Assets Non-current assets 5 6 Property, plant and equipment Intangible assets Investments properties Investments in associates Financial assets at fair value through other comprehensive Income Right of use assets N30 136,211,120 10 770,641 16,380,034 77,474,477 3,989,802 234,826,084 152,261,624 32,852 770,641 15,775,973 89,221,830 4,488.527 262,551,447 9 Current assets 10 Inventories Accounts receivable and other debit balances Cash and cash equivalents 11 12 13,330,333 15,704,653 15,186,967 44,221,953 279,048,037 16,429,047 27,471,315 9.528,618 53,428,980 315,980,427 Total assets 13 14 15 16 Equity and liabilities Equity Share capital Share premium Treasury shares Profits on sale of treasury shares Statutory reserve Voluntary reserve General reserve Investments revaluation reserve Group's share in associates' reserves Group's share in foreign currency exchange reserve (Accumulated losses/retained earnings Equity attributable to the Parent company shareholders Non-controlling interests Total equity 73,330,387 26,675,810 (13,546,935) 441,409 48,270,703 42,048,346 18,930,128 (14,590,317) (176,209) 107,677 (5,606,536) 175,884,463 148, 103 176,032 566 73,330,387 26,675,810 (13,546,935) 441,409 48,270,703 42,048,346 18,930,128 (2,347,295) (54,746) 95,186 15,320,862 209,163,855 163,843 209,327,698 Liabilities Non-current liabilities Loans, bank facilities and murabaha 17 Provision for employees' end of services indemnity Lease liability 53,010,713 3,522,910 3.481,193 60,014,816 57,737,687 3,594,497 3,933,552 65,265,736 9 Current liabilities Loans, bank facilities and murabaha 17 Accounts payable and other credit balances 18 9 Lease liability 20,530,142 22,015,137 455,376 43,000,655 103,015,471 279,048,037 18,963,851 21,983,181 439,961 41,386,993 106,652,729 315,980,427 Total Liabilities Total equity and liability
