Statement of Financial Position Bolton Ltd for years 2019, 2020 and 2021 2019 2020 2021 Non-current assets Land 2,500 2,5002.500 Property, plant & equipment 3,8803,7404,216 Total Non-current Assets 6,380 6,240 6,716 Current assets Inventory 216 360 544 Receivables 968 1,040 1,072 Cash at bank 240 168 72 Total Current Assets 1424 1,5681,688 Total assets 7,804 7,808 8,404 Capital Ordinary shares £1 2,4002,400 2,400 Preference shares £1 800 800 800 Share premium 96 134 200 Retained profits 2206 24262,622 Total capital 5,5025,760 6,022 Non-current liabilities Long term loan 10% 960 1040 1200 Total Non-current liabilities 960 1040 1200 Current liabilities |Ассounts payable 414 538 596 Таx 184 132 104 Other current liabilities 744 338 482 Total Current liabilities 1342 1.008 1,182 Total Capital and Liabilities 7,804 7,8088,404 Required a. Calculate for Bolton Ltd the following ratios: Gross Margin; Net profit Margin; ROCE; Inventory days; Receivable days; Payable days. b. Comment on each ratio calculated above in (a) and its implications and if the purchase of Bolton can be evaluated as a good investment for Parker Ltd.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Statement of Financial Position Bolton Ltd for years 2019, 2020
and 2021
| 2019 2020 2021
Non-current assets
Land
2,500 2,500 2,500
Property, plant & equipment 3,880 3,7404,216
Total Non-current Assets
6,380 6,240 6,716
Current assets
Inventory
216 360 544
Receivables
968 1,040 1,072
Cash at bank
240 168 72
Total Current Assets
1.424 1,568 1,68s
Total assets
7,804 7,808 8,404
Capital
Ordinary shares £1
2,400 2,400 2,400
Preference shares £1
800 800 800
Share premium
96 134 200
Retained profits
2,206 2,426 2,622
Total capital
5,502 5,760 6,022
Non-current liabilities
Long term loan 10%
960 1040 1200
Total Non-current liabilities 960 1040 1200
Current liabilities
Accounts payable
414 538 596
Tax
184 132 104
Other current liabilities
744 338 482
Total Current liabilities
1,342 1,008 1,182
Total Capital and Liabilities 7,804 7,8088,404
Required
a. Calculate for Bolton Ltd the following ratios: Gross Margin;
Net profit Margin; ROCE; Inventory days; Receivable
days; Payable days.
b. Comment on each ratio calculated above in (a) and its
implications and if the purchase of Bolton can be evaluated
as a good investment for Parker Ltd.
Transcribed Image Text:12:50 ul 4G O Вack Print Save Statement of Financial Position Bolton Ltd for years 2019, 2020 and 2021 | 2019 2020 2021 Non-current assets Land 2,500 2,500 2,500 Property, plant & equipment 3,880 3,7404,216 Total Non-current Assets 6,380 6,240 6,716 Current assets Inventory 216 360 544 Receivables 968 1,040 1,072 Cash at bank 240 168 72 Total Current Assets 1.424 1,568 1,68s Total assets 7,804 7,808 8,404 Capital Ordinary shares £1 2,400 2,400 2,400 Preference shares £1 800 800 800 Share premium 96 134 200 Retained profits 2,206 2,426 2,622 Total capital 5,502 5,760 6,022 Non-current liabilities Long term loan 10% 960 1040 1200 Total Non-current liabilities 960 1040 1200 Current liabilities Accounts payable 414 538 596 Tax 184 132 104 Other current liabilities 744 338 482 Total Current liabilities 1,342 1,008 1,182 Total Capital and Liabilities 7,804 7,8088,404 Required a. Calculate for Bolton Ltd the following ratios: Gross Margin; Net profit Margin; ROCE; Inventory days; Receivable days; Payable days. b. Comment on each ratio calculated above in (a) and its implications and if the purchase of Bolton can be evaluated as a good investment for Parker Ltd.
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Question 2
Company Parker Ltd wants to increase its efficiency and
effectiveness but especially its profitability and performance.
For this reason, the management of the company is evaluating to
purchase company Bolton Ltd that is a supplier of raw materials
to Parker Ltd. They, in fact, estimate that if Bolton Ltd will be
part of the group the profitability would improve in the next few
years.
In year 2021 company Parker Ltd reported the following ratios:
Gross Margin
28%
Operating margin
6%
ROCE
10%
Inventory days
25 days
Receivable days
35 days
Payable days
40 days
Below are the summarised financial statements for Bolton Ltd.
Income Statements Bolton Ltd for years 2019, 2020 and 2021
2019 2020 2021
Sales
16,064 16,080 1,6200
Cost of sales
11,248 11,652 12,072
Gross Profit
4,816 4,428 4,128
Expenses
3,752 3,772 3,496
Operating profit (PBIT) 1,064 656 632
Interest
96
104
120
Profit before tax
968
552
512
|Тах
184
132
104
Profit after tax
784
420
408
Dividends
Preference
64
72
72
Ordinary
108
128
140
Retained profit for year
612
220
196
Statement of Financial Position Bolton Ltd for years 2019, 2020
and 2021
|2019 2020 2021
Non-current assets
Land
2,500|2,500 2,500
Property, plant & equipment 3,880 3,740 4,216
Total Non-current Assets
6,380 6,240 6,716
Current assets
Transcribed Image Text:12:49 ul 4G O Вack Print Save Question 2 Company Parker Ltd wants to increase its efficiency and effectiveness but especially its profitability and performance. For this reason, the management of the company is evaluating to purchase company Bolton Ltd that is a supplier of raw materials to Parker Ltd. They, in fact, estimate that if Bolton Ltd will be part of the group the profitability would improve in the next few years. In year 2021 company Parker Ltd reported the following ratios: Gross Margin 28% Operating margin 6% ROCE 10% Inventory days 25 days Receivable days 35 days Payable days 40 days Below are the summarised financial statements for Bolton Ltd. Income Statements Bolton Ltd for years 2019, 2020 and 2021 2019 2020 2021 Sales 16,064 16,080 1,6200 Cost of sales 11,248 11,652 12,072 Gross Profit 4,816 4,428 4,128 Expenses 3,752 3,772 3,496 Operating profit (PBIT) 1,064 656 632 Interest 96 104 120 Profit before tax 968 552 512 |Тах 184 132 104 Profit after tax 784 420 408 Dividends Preference 64 72 72 Ordinary 108 128 140 Retained profit for year 612 220 196 Statement of Financial Position Bolton Ltd for years 2019, 2020 and 2021 |2019 2020 2021 Non-current assets Land 2,500|2,500 2,500 Property, plant & equipment 3,880 3,740 4,216 Total Non-current Assets 6,380 6,240 6,716 Current assets
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