following are the financial statements of Perfect Ltd for last year and this year: Income Statement for the year ended 31 December Last Year (000) This Year (000) Turnover 15,000 25,600 Cost of sales (7,496) (11,618) Gross profit 7,504 13,982 Operating expenses (4,410) (6,174) Operating profit 3,094 7,808 Interest payable (432) (912) Profit before taxation 2,662 6,896 Taxation (420) (780) Profit for the year 2,242 6,116 Balance sheet as at 31 December Last Year (000) This Year (000) Non-current assets 6,500 14,200 Current assets Inventories 2,418 4,820 Trade receivables 1,614 2,744 Other receivables 268 402 Cash 56 8 4,356 7,974 Total assets 10,856 22,174 Equity Ordinary shares of Rs. 0.50 each 3,600 3,600 Capital reserves 1,904 1,904 Retained profit 1,370 3,496 6,874 9,000 Non- current liabilities Loan notes 1,500 5,330 Current liabilities Trade payables 1,214 2,612 Other payables 848 1,202 Taxation 420 780 Bank overdraft -- 3,250 2,482 7,844 Total equity and liabilities 10,856 22,174 Note that Perfect Ltd hopes to retain the bank overdraft on a semi-permanent basis. Required: Calculate the following financial ratios for Perfect Ltd for last year and this year. (Use year-end figures where balance sheet items are involved.) Return on capital employed Return on ordinary shareholders’ funds Gross profit margin
following are the financial statements of Perfect Ltd for last year and this year:
Income Statement for the year ended 31 December
Last Year (000) This Year (000)
Turnover 15,000 25,600
Cost of sales (7,496) (11,618)
Gross profit 7,504 13,982
Operating expenses (4,410) (6,174)
Operating profit 3,094 7,808
Interest payable (432) (912)
Profit before
Taxation (420) (780)
Profit for the year 2,242 6,116
Balance sheet as at 31 December
Last Year (000) This Year (000)
Non-current assets 6,500 14,200
Current assets
Inventories 2,418 4,820
Trade receivables 1,614 2,744
Other receivables 268 402
Cash 56 8
4,356 7,974
Total assets 10,856 22,174
Equity
Ordinary shares of Rs. 0.50 each 3,600 3,600
Capital reserves 1,904 1,904
Retained profit 1,370 3,496
6,874 9,000
Non- current liabilities
Loan notes 1,500 5,330
Current liabilities
Trade payables 1,214 2,612
Other payables 848 1,202
Taxation 420 780
Bank overdraft -- 3,250
2,482 7,844
Total equity and liabilities 10,856 22,174
Note that Perfect Ltd hopes to retain the bank overdraft on a semi-permanent basis.
Required:
Calculate the following financial ratios for Perfect Ltd for last year and this year. (Use year-end figures where balance sheet items are involved.)
Return on capital employed
Return on ordinary shareholders’ funds
Gross profit margin
Operating profit margin
Inventories turnover period
Settlement period for trade receivables (days)
Acid test ratio
Gearing ratio
Use these ratios to comment on the performance and financial position of Perfect Ltd from the point of view of
A 10% owner of the equity; and
The business’s bank
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