Concept explainers
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
1 return on capital employed
2 operating profit margin
3 gross profit margin
4
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"
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