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Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly the formulae used for each ratio. Return on capital employed Gross profit percentage Net profit percentage Quick/Acid test ratio Receivables collection period Earnings per share   Using the additional information given and the ratios you calculated in part (a), write a brief report on the financial performance of F. Raser. Indicate in your report what additional information might be useful to help interpret the ratios.   © List two factors F. Raser should consider in deciding whether to raise finance by issuing loan notes rather than issuing shares

Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly the formulae used for each ratio. Return on capital employed Gross profit percentage Net profit percentage Quick/Acid test ratio Receivables collection period Earnings per share   Using the additional information given and the ratios you calculated in part (a), write a brief report on the financial performance of F. Raser. Indicate in your report what additional information might be useful to help interpret the ratios.   © List two factors F. Raser should consider in deciding whether to raise finance by issuing loan notes rather than issuing shares

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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  • Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly the formulae used for each ratio.
  • Return on capital employed
  • Gross profit percentage
  • Net profit percentage
  • Quick/Acid test ratio
  • Receivables collection period
  • Earnings per share

 

  • Using the additional information given and the ratios you calculated in part (a), write a brief report on the financial performance of F. Raser. Indicate in your report what additional information might be useful to help interpret the ratios.

 

© List two factors F. Raser should consider in deciding whether to raise finance by issuing loan notes rather than issuing shares

The ratio values for F. Raser for 2014 and 2015 as well as the current average ratio values for the industry sector in which F. Raser operates are as follows: Ratio Historical Data Industry Average 2014 2015 2016 Retum on capital employed (%) Gross profit percentage (%) Net profit percentage (%) Quick/Acid test ratio Receivables collectionperiod (days) Eamings per share (cents) 16-2 14-7 16-2 30-4 34-7 32-3 19:3 17-7 17-3 1-5 1-1 1-5 32-0 44-0 35-0 18-0 13-0 15-0 Required: (a) Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly the fommulae used for eachratio. www Retum on capital employed Gross pro fit percentage Net profit percentage (i) (1) (iv) Quick/Acid testratio (v) (vi) Eamings per share Receivables collection period (b) Using the additional infomation given and the ratios you calculated in part (a), write a briefreport on the financial performance of F. Raser. Indicate in your report what additional information might be usefil to help interpret the ratios. © List two factors F. Raser should consider in deciding whether to raise finance by issuing loannotes rather than issuing shares +
Transcribed Image Text:The ratio values for F. Raser for 2014 and 2015 as well as the current average ratio values for the industry sector in which F. Raser operates are as follows: Ratio Historical Data Industry Average 2014 2015 2016 Retum on capital employed (%) Gross profit percentage (%) Net profit percentage (%) Quick/Acid test ratio Receivables collectionperiod (days) Eamings per share (cents) 16-2 14-7 16-2 30-4 34-7 32-3 19:3 17-7 17-3 1-5 1-1 1-5 32-0 44-0 35-0 18-0 13-0 15-0 Required: (a) Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly the fommulae used for eachratio. www Retum on capital employed Gross pro fit percentage Net profit percentage (i) (1) (iv) Quick/Acid testratio (v) (vi) Eamings per share Receivables collection period (b) Using the additional infomation given and the ratios you calculated in part (a), write a briefreport on the financial performance of F. Raser. Indicate in your report what additional information might be usefil to help interpret the ratios. © List two factors F. Raser should consider in deciding whether to raise finance by issuing loannotes rather than issuing shares +
F. Raser Income statement for the year ended 31 May 2016 www $000 Revenue 160 Cost of sales (100) Gross profit Distribution & administrative expenses Profit from operations 60 25 Finance cost Profit before tax 20 Tax expense Net profit for the period (10) 10 F. Raser Statement of Financial Position as at 31 May 2016 ww $000 $00 Assets Non-current as sets 150 Current assets Inventory Trade receivables 45 25 Cash and bank 75 Total Assets 225 Equity and liabilities Capital and reserves $1 Ordinary shares 100 Reserves 30 130 Non-current liabilities 10% loan notes 50 Current liabilities Trade payables 30 Тахation 10 Dividends (for the year) 45 Total equity and liabilities 225
Transcribed Image Text:F. Raser Income statement for the year ended 31 May 2016 www $000 Revenue 160 Cost of sales (100) Gross profit Distribution & administrative expenses Profit from operations 60 25 Finance cost Profit before tax 20 Tax expense Net profit for the period (10) 10 F. Raser Statement of Financial Position as at 31 May 2016 ww $000 $00 Assets Non-current as sets 150 Current assets Inventory Trade receivables 45 25 Cash and bank 75 Total Assets 225 Equity and liabilities Capital and reserves $1 Ordinary shares 100 Reserves 30 130 Non-current liabilities 10% loan notes 50 Current liabilities Trade payables 30 Тахation 10 Dividends (for the year) 45 Total equity and liabilities 225
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