FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Planet Ltd produces fridges and freezers, which are sold to retailers. The financial statements for the last three years are as follows:
|
Income statements for the year ending 31st December |
||
|
|
2021 |
2022 |
|
|
£000 |
£000 |
|
Revenue |
336,250 |
427,038 |
|
Cost of sales |
(126,675) |
(190,012) |
|
Gross profit |
209,575 |
237,025 |
|
Administration expenses |
(73,290) |
(95,795) |
|
Distribution expenses |
(14,678) |
(8,720) |
|
Operating profit |
121,407 |
121,931 |
|
Interest |
(8,750) |
(11,250) |
|
Profit before tax |
118,142 |
166,326 |
|
Tax |
(22,531) |
(22,136) |
|
Profit for the year |
90,126 |
88,545 |
|
|
||
|
|
2021 |
2022 |
|
|
￡000 |
￡000 |
|
Non-current assets |
|
|
|
Property, plant and equipment |
286,250 |
327,650 |
|
Current assets |
|
|
|
Inventories |
37,000 |
28,000 |
|
Trade receivables |
42,000 |
43,500 |
|
Cash |
19,632 |
24,570 |
|
|
98,632 |
96,070 |
|
Total assets |
384,882 |
423,720 |
|
|
|
|
|
Current liabilities |
|
|
|
Trade payables |
34,000 |
28,750 |
|
Accruals |
22,531 |
22,136 |
|
Tax liability |
1,250 |
1,425 |
|
|
57,781 |
52,311 |
|
Non-current liabilities |
|
|
|
Bank loan |
175,000 |
225,000 |
|
|
|
|
|
Equity |
|
|
|
Ordinary share capital of £1 (fully paid) |
80,000 |
80,000 |
|
|
72,101 |
66,409 |
|
|
152,101 |
146,409 |
|
Total equity and liabilities |
384,882 |
423,720 |
- Calculate the following financial ratios for the year 2022. Show your calculations.
The ratios for 2021 have been provided in the table below :
- Gross profit margin
- Net profit margin
- Return on capital employed
-
Current ratio - Quick ratio
- Inventory holding period
- Receivables collection period
- Payables payment period
- Gearing ratio
- Interest coverage
|
|
2021 |
2022 |
|
|
a) Gross profit margin |
62.33% |
|
|
|
b) Net profit margin |
26.80% |
|
|
|
c) Return on capital employed |
37.12% |
|
|
|
d) Current ratio |
1.71 :1 |
|
|
|
e) Quick ratio |
1.07 :1 |
|
|
|
f) Inventory holding period |
119 days |
|
|
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