18. McBride plc is a company which uses a variety of component parts in its manufacturing operations. One of the company's suppliers has gone out of business and seeks an alternative source of supply for the component previously purchased fr that supplier. Two companies have been identified as potential suppliers and they prepare accounts to 31 December and McBride obtained the following copies of each company's financial statements for the year ended to 31 December 2020. Income Statement for the year ended to 31 December 2020 X Ltd Y Ltd £000 £000 Revenue 6,310 (3,840) | (4.240) 1,880 5,720 Cost of sales Gross Profit Operating expenses Operating profit 2,070 (760) (1.080) 990 1,120 (50) Interest (350) Profit before tax 1,070 640 Taxation (320) (210) Profit for the year 750 430 Statement of Financial Position for the year ended to 31 December 2020 X Ltd Y Ltd £000 6,330 £000 Non current assets 4,570 Current assets Inventory 510 890
18. McBride plc is a company which uses a variety of component parts in its manufacturing operations. One of the company's suppliers has gone out of business and seeks an alternative source of supply for the component previously purchased fr that supplier. Two companies have been identified as potential suppliers and they prepare accounts to 31 December and McBride obtained the following copies of each company's financial statements for the year ended to 31 December 2020. Income Statement for the year ended to 31 December 2020 X Ltd Y Ltd £000 £000 Revenue 6,310 (3,840) | (4.240) 1,880 5,720 Cost of sales Gross Profit Operating expenses Operating profit 2,070 (760) (1.080) 990 1,120 (50) Interest (350) Profit before tax 1,070 640 Taxation (320) (210) Profit for the year 750 430 Statement of Financial Position for the year ended to 31 December 2020 X Ltd Y Ltd £000 6,330 £000 Non current assets 4,570 Current assets Inventory 510 890
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:18. McBride plc is a company which uses a variety of component parts in its
manufacturing operations. One of the company's suppliers has gone out of business
and seeks an alternative source of supply for the component previously purchased from
that supplier. Two companies have been identified as potential suppliers and they
prepare accounts to 31 December and McBride obtained the following copies of each
company's financial statements for the year ended to 31 December 2020.
Income Statement for the year ended to 31 December 2020
X Ltd
Y Ltd
£000
6,310
(3.840) (4.240)
2,070
(760) (1.080)
1,120
(50)
1,070
(320)
750
£000
Revenue
5,720
Cost of sales
Gross Profit
1,880
Operating expenses
Operating profit
Interest
Profit before tax
990
(350)
640
(210)
Таxation
Profit for the year
430
Statement of Financial Position for the year ended to 31 December 2020
X Ltd
Y Ltd
£000
£000
Non current assets
4,570
6,330
Current assets
Inventory
Trade receivables
510
890
670
1,090
Cash
340
1,520
6,090
1,980
8,310
Total Assets
X Ltd
Y Ltd
£000
£000
Equity
Share capital
Retained earnings
2,000
2,000
2.820
1.030
4,820
3,030
Non current liabilities
Loan
500
3,500
Current liabilities
Trade payables
450
1,130
210
Таxation
320
Bank
440
770
1.780
Total equity and
liabilities
6,090
8,310
Transcribed Image Text:Required:
(a) Calculate ROCE, Current ratio, Receivable period (days), Inventory period
(days), Payable period (days) for X Ltd and Y Ltd.
(b) Use the information provided by these ratios to explain to the management of
McBride plc which of the two companies seems likely to be a more reliable
source of supply.
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