X Abecode Styles Heading 2 Calibrl(Bodyl 5 A- A+ B I ube X, X Normal No Spacing Heading 1 A. Pane 18 17 11 12 14 13 Case Study 2 Tartan Group Construction Limited ("Tartan") is considering the possibility of bidding for a large family-owned house-building company, Tweed Limited. Tartan's business interests cover a wide range of construction activities, concentrating mainly on large motorway and bridge projects with a large presence in the low-cost end of the housing market. As part of Tartan's recent strategic policy review, its Board of Directors has decided that it believes that it could generate more shareholder value if future growth was propelled by acquisitions rather than the present reliance on the organic growth of the existing business. In particular, Tweed Limited appears an ideal complementary acquisition for Tartan, as it concentrates on the provision of high-quality executive housing. The financial director of Tartan, has been assembling a record of the recent performance of Tweed Limited - through the compilation of a series of ratios extracted from its published accounts for 2018 and 2017, as follows: Focus Page of 12 2344 words English (United States) Q- Search in Document Home View AaBbCcD Abode Paste Styles PAD Create and Adote August-2020 H17AC en-GB [Compatibility Mode] Insert Draw Design Layout References Mailings Review Acrobat Calibri (Body 5 - A. A- AS Abcode U-a X, XI :: MINE Ratio Review 2018 2017 Earnings per Share (pence) 65.2 48.2 Dividend Cover (times) 15.5 6.7 Average Collection Period (days) 88 65 Inventory Turnover (times) 6.8 HH 5.4 Current times) 1.2 Quick (times) 0.8 0.5 Profit margin (%) 20.1 16.2 Return on total assets (%) 10.1 15.2 Debt (%) 31.1 23.4 Times interest earned 33.6 23.7 Tartan's own key ratios for 2020 are: Return on Total assets 28% Profit Margin 10% Debt 15% The year-end 2020 accounts of Tweed Limited have just become available, providing the opportunity to update the ratio review to include both 2019 and 2020 accounts. The following information has been extracted from the published financial accounts of Tweed limited at its 2020 year-end. a August-2020_H17AC_en-GB [Compatibility Mode] Q- Search Mailings Review View Insert Draw Design Layout References Calibri (Body) - 5 A- A AS B I u-abe XX Aabbcode -D ABCDE Aabete No Spacing Normal Heading 1 Heading 2 G Style Pand 10 12 15 15 17 2020 'ooo 2019 'ooo Profit and Loss Account Revenue Cost of Sales Gross Profit Other Expenses Profit before Interest Interest Profit before Taxation Taxation Profit after Taxation Dividend paid and proposed Retained Profits for the year 2,550 1,620 1,030 724 306 42 264 42 222 60 162 2,330 1,040 1,290 722 568 66 502 94 408 132 276 2020 'ooo 2020 '000 2019 'ooo Balance Sheet Q- Search in Document Home August-2020 H17AC en-GB [Compatibility Mode] Review Acrobat Insert Draw Design Mallings 8+ Share Layout References A- A. A Calibri (Bodyl - 5 AaBbc Paste B IU- X Styles Pane Create and Share Reques Adobe PDF 2019 2020 '000 2020 'ooo '000 Balance Sheet I Non-current Assets 3,024 2,028 Current Assets Inventories Debtors Cash at Bank 550 400 50 1,000 1 240 320 250 374 944 1.030 (86 Current Liabilities Net Current Liabilities (240) Total Assets less Current Liabilities 2,784 1,942 Long-term Liabilities 820 1.964 280 1,662 Capital & Reserves Ordinary Share Capital Share Premium Retained Profits 702 200 1,062 1,964 662 100 900 1.662 O focus Page 7 of 12 English (United States sy Pin Create and Share Adobe PDF Current Llabilities Net Current Liabilities 1,000 1,240 944 1,030 (86) (240) Total Assets less Current Liabilities 2,784 1,942 Long-term Liabilities 820 1.964 1,662 Capital & Reserves Ordinary Share Capital Share Premium Retained Profits 702 200 1,062 1,984 662 100 900 1,662 Share Capital comprises 1 Ordinary Shares. During 2020, 40,000 Ordinary Shares were issued at a price of 3.50 per share. 6 2344 words English (United States) Focus Q- Search Draw Design Layout References A A A August-2020_H17AC_en-GB [Compatibility Mode] Mailings Review Viewocolat Table Design E. AaBbcode Layout Body) 11 A RhCD AaBb CcDdE U - ale XX Normal No Spacing Heading 1 Heading 2 Styles Pane 12 131 16 P101 Industry average figures are available for 2019 as follows: Ratio Industry Average + Earnings per Share (pence) Dividend Cover (times) Average Collection Period (days) Inventory Turnover (times) Current times) Quick (times) Profit margin (%) Return on total assets (%) Debt (%) Times interest earned 38.2 8.8 75 7.2 0.9 0.8 8.0 22.2 35.2 28.1 Required: 1. Based on the extracts from the 2020 published accounts, update the tabulation of ratios mood Limited for both 2019 and 2020 Show all workings t insert Draw References August-2020 H17AC en-GB [Compatibility Model Review View Acrobat Table Design Q- Search in Document Calibri (Body Design Layout - 11 A- Ar X, XA Mailings E. Layout Share B 1 U ABCD Alb Masco Sites PN Adobe POP Signature Profit margin (%) Return on total assets (%) Debt (%) Times interest earned MA 8.0 22.2 35.2 28.1 Required: I 1. Based on the extracts from the 2020 published accounts, update the tabulation of ratios for Tweed Limited for both 2019 and 2020. Show all workings. (10 marks) 2. Identify any factors in performance of Tweed Limited over the past four-year period which might prove to be of concern, especially in relation to 2019 industry averages. (10 marks maximum word count 800 words) 3. Compare the performance of Tweed Limited with Tartan's key ratios and comment on whether it is likely that the acquisition of Tweed Limited will strengthen or weaken these ratios. (5 marks - maximum word count 300 words) Total 25 marks 157 2344 words nish United Santes X Abecode Styles Heading 2 Calibrl(Bodyl 5 A- A+ B I ube X, X Normal No Spacing Heading 1 A. Pane 18 17 11 12 14 13 Case Study 2 Tartan Group Construction Limited ("Tartan") is considering the possibility of bidding for a large family-owned house-building company, Tweed Limited. Tartan's business interests cover a wide range of construction activities, concentrating mainly on large motorway and bridge projects with a large presence in the low-cost end of the housing market. As part of Tartan's recent strategic policy review, its Board of Directors has decided that it believes that it could generate more shareholder value if future growth was propelled by acquisitions rather than the present reliance on the organic growth of the existing business. In particular, Tweed Limited appears an ideal complementary acquisition for Tartan, as it concentrates on the provision of high-quality executive housing. The financial director of Tartan, has been assembling a record of the recent performance of Tweed Limited - through the compilation of a series of ratios extracted from its published accounts for 2018 and 2017, as follows: Focus Page of 12 2344 words English (United States) Q- Search in Document Home View AaBbCcD Abode Paste Styles PAD Create and Adote August-2020 H17AC en-GB [Compatibility Mode] Insert Draw Design Layout References Mailings Review Acrobat Calibri (Body 5 - A. A- AS Abcode U-a X, XI :: MINE Ratio Review 2018 2017 Earnings per Share (pence) 65.2 48.2 Dividend Cover (times) 15.5 6.7 Average Collection Period (days) 88 65 Inventory Turnover (times) 6.8 HH 5.4 Current times) 1.2 Quick (times) 0.8 0.5 Profit margin (%) 20.1 16.2 Return on total assets (%) 10.1 15.2 Debt (%) 31.1 23.4 Times interest earned 33.6 23.7 Tartan's own key ratios for 2020 are: Return on Total assets 28% Profit Margin 10% Debt 15% The year-end 2020 accounts of Tweed Limited have just become available, providing the opportunity to update the ratio review to include both 2019 and 2020 accounts. The following information has been extracted from the published financial accounts of Tweed limited at its 2020 year-end. a August-2020_H17AC_en-GB [Compatibility Mode] Q- Search Mailings Review View Insert Draw Design Layout References Calibri (Body) - 5 A- A AS B I u-abe XX Aabbcode -D ABCDE Aabete No Spacing Normal Heading 1 Heading 2 G Style Pand 10 12 15 15 17 2020 'ooo 2019 'ooo Profit and Loss Account Revenue Cost of Sales Gross Profit Other Expenses Profit before Interest Interest Profit before Taxation Taxation Profit after Taxation Dividend paid and proposed Retained Profits for the year 2,550 1,620 1,030 724 306 42 264 42 222 60 162 2,330 1,040 1,290 722 568 66 502 94 408 132 276 2020 'ooo 2020 '000 2019 'ooo Balance Sheet Q- Search in Document Home August-2020 H17AC en-GB [Compatibility Mode] Review Acrobat Insert Draw Design Mallings 8+ Share Layout References A- A. A Calibri (Bodyl - 5 AaBbc Paste B IU- X Styles Pane Create and Share Reques Adobe PDF 2019 2020 '000 2020 'ooo '000 Balance Sheet I Non-current Assets 3,024 2,028 Current Assets Inventories Debtors Cash at Bank 550 400 50 1,000 1 240 320 250 374 944 1.030 (86 Current Liabilities Net Current Liabilities (240) Total Assets less Current Liabilities 2,784 1,942 Long-term Liabilities 820 1.964 280 1,662 Capital & Reserves Ordinary Share Capital Share Premium Retained Profits 702 200 1,062 1,964 662 100 900 1.662 O focus Page 7 of 12 English (United States sy Pin Create and Share Adobe PDF Current Llabilities Net Current Liabilities 1,000 1,240 944 1,030 (86) (240) Total Assets less Current Liabilities 2,784 1,942 Long-term Liabilities 820 1.964 1,662 Capital & Reserves Ordinary Share Capital Share Premium Retained Profits 702 200 1,062 1,984 662 100 900 1,662 Share Capital comprises 1 Ordinary Shares. During 2020, 40,000 Ordinary Shares were issued at a price of 3.50 per share. 6 2344 words English (United States) Focus Q- Search Draw Design Layout References A A A August-2020_H17AC_en-GB [Compatibility Mode] Mailings Review Viewocolat Table Design E. AaBbcode Layout Body) 11 A RhCD AaBb CcDdE U - ale XX Normal No Spacing Heading 1 Heading 2 Styles Pane 12 131 16 P101 Industry average figures are available for 2019 as follows: Ratio Industry Average + Earnings per Share (pence) Dividend Cover (times) Average Collection Period (days) Inventory Turnover (times) Current times) Quick (times) Profit margin (%) Return on total assets (%) Debt (%) Times interest earned 38.2 8.8 75 7.2 0.9 0.8 8.0 22.2 35.2 28.1 Required: 1. Based on the extracts from the 2020 published accounts, update the tabulation of ratios mood Limited for both 2019 and 2020 Show all workings t insert Draw References August-2020 H17AC en-GB [Compatibility Model Review View Acrobat Table Design Q- Search in Document Calibri (Body Design Layout - 11 A- Ar X, XA Mailings E. Layout Share B 1 U ABCD Alb Masco Sites PN Adobe POP Signature Profit margin (%) Return on total assets (%) Debt (%) Times interest earned MA 8.0 22.2 35.2 28.1 Required: I 1. Based on the extracts from the 2020 published accounts, update the tabulation of ratios for Tweed Limited for both 2019 and 2020. Show all workings. (10 marks) 2. Identify any factors in performance of Tweed Limited over the past four-year period which might prove to be of concern, especially in relation to 2019 industry averages. (10 marks maximum word count 800 words) 3. Compare the performance of Tweed Limited with Tartan's key ratios and comment on whether it is likely that the acquisition of Tweed Limited will strengthen or weaken these ratios. (5 marks - maximum word count 300 words) Total 25 marks 157 2344 words nish United Santes