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 Statements of financial position as at 31st December 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 Retained earnings 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
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 |
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|
|
e) Quick ratio |
1.07 :1 |
|
|
|
f) Inventory holding period |
119 days |
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