You are a consultant for Glory Ltd, a quoted company operating in the manufacturing sector. Following are a Statement of Profit or Loss and Statement of Financial Position with comparatives for the year ended 31st December 2018. 2018 GHS 2017 GHS Sales revenue 3,095,576 1,909,051 Cost of sales 2,402,609 1,441,950 Gross profit 692,967 467,101 Interest receivable 744 2,782 Administration expenses 333,466 222,872 Operating profit 360,245 247,011 Interest 18,115 21,909 Profit before taxation 342,130 225,102 Income tax expense 74,200 31,272 Profit for the year 267,930 193,830 Statement of Profit or Loss for the year ended 31st December, 2018 Statement of Financial Position as at 31 December 2018 Assets 2018 GHS 2017 GHS Non-current assets Property, plant and equipment 802,180 656,071 Current assets Inventory 64,422 86,550 Trade receivables 905,679 807,712 Prepayment and accrued income 97,022 45,729 Cash at bank and in hand 1,327 68,363 1,068,450 1,008,354 Total assets 1,870,630 1,664,425 Equity and liabilities Equity Ordinary shares 258,178 258,178 Income surplus 651,721 410,591 909,899 668,769 Non-current liabilities 10% loan stock 100,000 100,000 Current liabilities Trade payables 627,018 545,340 Accruals and deferred income 81,279 280,464 Corporate taxes 108,000 37,200 Other taxes 44,434 32,652 860,731 895,656 Total equity and liabilities 1,870,630 1,664,425 Required: a. Calculate the following ratios: Profitability ratios - Return on Capital Employed, Return on Equity, Gross profit margin and Net profit margin Long term solvency and stability - Debt/Asset ratio, Gearing ratio and Interest cover iii. Short-term solvency and liquidity – Current ratio and Acid test ratio iv. Efficiency (turnover ratios) – Account receivable collection period, Account payable payment period, Inventory turnover (times)
You are a consultant for Glory Ltd, a quoted company operating in the manufacturing sector. Following are a Statement of Profit or Loss and
|
Statement of Profit or Loss for the year ended 31st December, 2018
Statement of Financial Position as at 31 December 2018
Assets |
2018 GHS |
|
2017 GHS |
Non-current assets Property, plant and equipment |
802,180 |
|
656,071 |
Current assets |
|
|
|
Inventory |
64,422 |
|
86,550 |
Trade receivables |
905,679 |
|
807,712 |
Prepayment and accrued income |
97,022 |
|
45,729 |
Cash at bank and in hand |
1,327 |
|
68,363 |
|
1,068,450 |
|
1,008,354 |
Total assets |
1,870,630 |
|
1,664,425 |
Equity and liabilities Equity Ordinary shares |
258,178 |
|
258,178 |
Income surplus |
651,721 |
|
410,591 |
|
909,899 |
|
668,769 |
Non-current liabilities 10% loan stock |
100,000 |
|
100,000 |
Current liabilities Trade payables |
627,018 |
|
545,340 |
Accruals and deferred income |
81,279 |
|
280,464 |
Corporate taxes |
108,000 |
|
37,200 |
Other taxes |
44,434 |
|
32,652 |
|
860,731 |
|
895,656 |
Total equity and liabilities |
1,870,630 |
|
1,664,425 |
Required:
- a. Calculate the following ratios:
- Profitability ratios - Return on Capital Employed, Return on Equity, Gross profit margin and Net profit margin
- Long term solvency and stability - Debt/Asset ratio, Gearing ratio and Interest cover
iii. Short-term solvency and
iv. Efficiency (turnover ratios) – Account receivable collection period, Account payable payment period, Inventory turnover (times)
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