businessfinancefinance questions and answersThe Following Are The Financial Statements Of Perfect Ltd For Last Year And This Year: Income …Question: The Following Are The Financial Statements Of Perfect Ltd For Last Year And This Year: Income Statement For The Year Ended 31 December Last Year (000) This Year (000) Turnover 15,000 25,600 Cost Of Sales (7,496) (11,618) Gross Profit 7,504 13,982 Operating Expenses (4,410) (6,174) Operating Profit 3,094 7,808 Interest Payable (432) (912) Profit Before …This problem has been solved!See the answerThe following are the financial statements of Perfect
Ltd for last year and this year:
Income Statement for the year ended 31 December
Last Year (000) This Year (000)
Turnover
15,000
25,600
Cost of sales
(7,496)
(11,618)
Gross profit
7,504
13,982
Operating
expenses
(4,410)
(6,174)
Operating
profit
3,094
7,808
Interest
payable
(432)
(912)
Profit before
taxation
2,662
6,896
Taxation
(420)
(780)
Profit for the
year
2,242
6,116
Balance sheet as at 31 December
Last Year (000) This Year (000)
Non-current
assets
6,500
14,200
Current assets
Inventories
2,418
4,820
Trade receivables
1,614
2,744
Other receivables
268
402
Cash
56
8
4,356
7,974
Total assets
10,856
22,174
Equity
Ordinary shares of Rs. 0.50 each
3,600
3,600
Capital
reserves
1,904
1,904
Retained
profit
1,370
3,496
6,874
9,000
Non- current liabilities
Loan
notes
1,500
5,330
Current liabilities
Trade
payables
1,214
2,612
Other
payables
848
1,202
Taxation
420
780
Bank overdraft
—
3,250
2,482
7,844
Total equity and liabilities
10,856
22,174
Note that Perfect Ltd hopes to retain the bank overdraft on a
semi-permanent basis.
Required:
Calculate the following financial ratios for Perfect Ltd for last
year and this year. (Use year-end figures where balance sheet items
are involved.)
1. Return on capital employed
2. Return on ordinary shareholders’
funds
3. Gross profit margin
4. Operating profit margin
5. Inventories turnover period
6. Settlement period for trade receivables
(days)
7. Current ratio
8. Acid test ratio
9. Gearing ratio
Use these ratios to comment on the performance and financial
position of Perfect Ltd from the point of view of
a. A 10% owner of the equity;
and
The business’s
bank
Expert Answer 100% (1 rating) The above ratios can be analysed to interpret the financial position and strength of the company. Comment as an 10% Equity holder: Looking at the ROCE, Gross profit Ratio and Operating profit Raview the full answer
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