FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Threads Limited manufactures nuts and bolts, which are sold to industrial users. The abbreviated financial statements for 2014 and 2015 are as follows:

Dividends were paid on ordinary shares of £70,000 and £72,000 in respect of 2014 and 2015 respectively.

Required:

(a) Calculate the following financial ratios for both 2014 and 2015 (using year-end figures for statement of financial position items):

1 return on capital employed

2 operating profit margin

3 gross profit margin

4 current ratio

5 acid test ratio

6 settlement period for trade receivables

7 settlement period for trade payables

8 inventories turnover period.

 

(b) Comment on the performance of Threads Limited from the viewpoint of a business considering supplying a substantial amount of goods to Threads Limited on usual trade credit terms.

please do "b"

 

Income statements for the year ended 30 June
2014
2015
Revenue
Cost of sales
£000
1,180
£000
1,200
750)
(680)
500
Gross profit
Operating expenses
Depreciation
Operating profit
450
(200)
(208)
(66)
234
(75)
167
Interest
Profit before taxation
234
159
(48)
111
Taxation
Profit for the year
Statements of financial position as at 30 June
2014
L000
2015
£000
ASSETS
Non-current assets
Property, plant and equipment
702
687
Current assets
Inventories
148
236
Trade receivables
102
156
Cash
253
955
396
1,083
Total assets
EQUITY AND LIABILITIES
Equity
Ordinary share capital (e1 shares, fully paid)
Retained earmings
500
256
756
500
295
795
Non-current liabilities
Borrowings - bank loan
Current liabilities
Trade payables
Other payables and accruals
60
18
76
16
Taxation
40
81
24
Short-term borrowings (all bank overdraft)
122
199
955
238
1,083
Total equity and liabilities
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Transcribed Image Text:Income statements for the year ended 30 June 2014 2015 Revenue Cost of sales £000 1,180 £000 1,200 750) (680) 500 Gross profit Operating expenses Depreciation Operating profit 450 (200) (208) (66) 234 (75) 167 Interest Profit before taxation 234 159 (48) 111 Taxation Profit for the year Statements of financial position as at 30 June 2014 L000 2015 £000 ASSETS Non-current assets Property, plant and equipment 702 687 Current assets Inventories 148 236 Trade receivables 102 156 Cash 253 955 396 1,083 Total assets EQUITY AND LIABILITIES Equity Ordinary share capital (e1 shares, fully paid) Retained earmings 500 256 756 500 295 795 Non-current liabilities Borrowings - bank loan Current liabilities Trade payables Other payables and accruals 60 18 76 16 Taxation 40 81 24 Short-term borrowings (all bank overdraft) 122 199 955 238 1,083 Total equity and liabilities
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