1. Calculate the following ratios in respect of the year ended 30 June 2022: (Round off to two decimal points) a) Rate of return on investment b) Earnings per ordinary share c) Receivables collection period in days
The following is an extract from the
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Additional information:
1. Issued share capital:
- 400 000 ordinary shares of £1 each
- 40 000 10%
2.Gross profit for the year amounted to £1 344 000 and represents 40% of turnover for the year.
3.All sales and all purchases are on credit.
4.Income from investment for the year amounted to £24 000.
5.The dividends payable represents the total amount of dividends declared on
ordinary shares for the year. All preference dividends were paid up to date.
6.No further distribution of net profit other than dividends was made during the year.
7.No tax was outstanding at the beginning of the year.
8.The following ratios, calculated for the previous financial year, are available:
Receivables collection period – 25 days Payables payment period – 30 days
Number of days inventory on hand – 60 days
REQUIRMENT:
1. Calculate the following ratios in respect of the year ended 30 June 2022: (Round off to two decimal points)
a)
b) Earnings per ordinary share
c) Receivables collection period in days
d) Payables payment period in days
e) Number of days inventory on hand
2. Analyse and interpret the following ratios calculated above
a) Receivables collection period
b) Payables payment period
c) Number of days inventory on hand
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