A. Apart from the information arising from your analysis what other information would you advise the bank to consider when making its decision? DebtorsBank and cashCurrent liabilitiesCreditorsTaxationDividendsBank loans and overdraftNet current assetsFinanced byOrdinary share capitalShare premium accountRetained profitsRevaluation reservesTotal equity and reservesLoans19X417,5894,69842,31816,1974598012,2292,93119,74919X519X619X724,693 60,27048,9876,8017,8393,27354,528 121,200 127,083 176,12124,90914,79339,70210,58128,038 31,19414,280 23,33439,70224,5887681,8124,02655,65941,1304,3022,7123,3393,7383,67218,18029,31637,63881,480 76,896 117,58539,72050,18758,53651,684 90,945 103,896 138,46519X866,7689,7472,8297,53025,8483,39614,5986,7927,07711,24712,38730,975 50,427 48,4686,7356,7359,42336,20755,70475,201 77,35515,477 35,241 28,695 61,11051,684 90,945 103,896 138,46572,8313,444(a) From a review of the information above identify the areas which you would concentrateon in your analysis of the position of Belper Ltd.(b) Produce common size profit and loss accounts for the five years and analyse these state-ments with particular reference to the profitability of Belper.(c) Calculate the trends in the Sales and Cost of sales and comment on the informationdisclosed by your analysis.(d) Using whatever form of analysis you consider appropriate comment on the financial riskprofile of Belper Ltd for the five years under review.e) Based on your analysis write a brief report for the bank advising them on whether tocontinue to provide finance for Belper Ltd.f) Apart from the information arising from your analysis what other information would youadvise the bank to consider when making its decision?g) Discuss how your analysis would have been altered if you were carrying out the analysison behalf of a prospective shareholder. Financial statement analysis2. Given below are the summarized accounts of Belper Ltd for the past five years. These formthe basis for the questions which followSummarized profit and loss accounts of Belper Ltd19X5£000SalesCost of salesTrading profitDepreciationInterestNet profit before taxTaxationNet profit after taxExtraordinary itemsDividendsRetained profitsRetained at start of yearRetained at end of yearFixed assetsFreehold land and buildingsLeasehold land and buildingsPlant and machineryTotal gross fixed assetsDepreciation freeholdDepreciation leaseholdDepreciation plant, etc.Total depreciationNet fixed assets19X4Intangible fixed assetsGoodwillInvestments£000Patents and trade marksCurrent assetsStock93,93081,75012,1801,0232,7278,4302,5175,9135,9138015,11214,63719,749Summarized balance sheets of Belper Ltd19X4£00014,0582,3498,08224,489116,232101,67314,5591,3802,65210,5271,7461174,1974,31420,1758,781(870)7,9111,8126,0997894863,97219,74925,84819X5£000Notes(During 19X8 some of the freehold properties were revalued.(i) Loans amounting to £22 million were repaid during the year.(i) The extraordinary item shown in the profit and loss account in 19X8 represents thedamages received by the company from a libel action against a newspaper.(iv) No fixed assets were disposed of during the year.14,5712,49011,54128,60219X6£0008077953,61820,031 23,034259,470230,33429,1363,6787,70717,7519,2708,481(15)8,4663,3395,12725,84830,97519X6£0001473455,3258,2595,472 8,60423,130 43,92019X7£000278,340244,80933,5314,0658493936,06353,09110,16719,2997,83311,46619X8£000372,753346,69526,0588,15114,0823,8252,6011,2244894,98916,4551,7133,7383,67212,717-1,95930,97550,42743,692 48,46820,559 20,598 29,7215,1845,193 12,56426,78130,00047,17252,524 55,791 89,45719X719X8£000 £00059785877411,27718,74712,05120,20243,740 69,2559363038,73074,823 99,6069363939,345

Answer:- Decision making meaning:- The process of choosing choices by identifying a decision,…

Answered: A. Apart from the information arising…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A. Apart from the information arising from your analysis what other information would you advise the bank to consider when making its decision?

Transcribed Image Text:Debtors Bank and cash Current liabilities Creditors Taxation Dividends Bank loans and overdraft Net current assets Financed by Ordinary share capital Share premium account Retained profits Revaluation reserves Total equity and reserves Loans 19X4 17,589 4,698 42,318 16,197 459 801 2,229 2,931 19,749 19X5 19X6 19X7 24,693 60,270 48,987 6,801 7,839 3,273 54,528 121,200 127,083 176,121 24,909 14,793 39,702 10,581 28,038 31,194 14,280 23,334 39,702 24,588 768 1,812 4,026 55,659 41,130 4,302 2,712 3,339 3,738 3,672 18,180 29,316 37,638 81,480 76,896 117,585 39,720 50,187 58,536 51,684 90,945 103,896 138,465 19X8 66,768 9,747 2,829 7,530 25,848 3,396 14,598 6,792 7,077 11,247 12,387 30,975 50,427 48,468 6,735 6,735 9,423 36,207 55,704 75,201 77,355 15,477 35,241 28,695 61,110 51,684 90,945 103,896 138,465 72,831 3,444 (a) From a review of the information above identify the areas which you would concentrate on in your analysis of the position of Belper Ltd. (b) Produce common size profit and loss accounts for the five years and analyse these state- ments with particular reference to the profitability of Belper. (c) Calculate the trends in the Sales and Cost of sales and comment on the information disclosed by your analysis. (d) Using whatever form of analysis you consider appropriate comment on the financial risk profile of Belper Ltd for the five years under review. e) Based on your analysis write a brief report for the bank advising them on whether to continue to provide finance for Belper Ltd. f) Apart from the information arising from your analysis what other information would you advise the bank to consider when making its decision? g) Discuss how your analysis would have been altered if you were carrying out the analysis on behalf of a prospective shareholder.

Financial statement analysis
2. Given below are the summarized accounts of Belper Ltd for the past five years. These form
the basis for the questions which follow
Summarized profit and loss accounts of Belper Ltd
19X5
£000
Sales
Cost of sales
Trading profit
Depreciation
Interest
Net profit before tax
Taxation
Net profit after tax
Extraordinary items
Dividends
Retained profits
Retained at start of year
Retained at end of year
Fixed assets
Freehold land and buildings
Leasehold land and buildings
Plant and machinery
Total gross fixed assets
Depreciation freehold
Depreciation leasehold
Depreciation plant, etc.
Total depreciation
Net fixed assets
19X4
Intangible fixed assets
Goodwill
Investments
£000
Patents and trade marks
Current assets
Stock
93,930
81,750
12,180
1,023
2,727
8,430
2,517
5,913
5,913
801
5,112
14,637
19,749
Summarized balance sheets of Belper Ltd
19X4
£000
14,058
2,349
8,082
24,489
116,232
101,673
14,559
1,380
2,652
10,527
1,746
117
4,197
4,314
20,175
8,781
(870)
7,911
1,812
6,099
789
486
3,972
19,749
25,848
19X5
£000
Notes
(During 19X8 some of the freehold properties were revalued.
(i) Loans amounting to £22 million were repaid during the year.
(i) The extraordinary item shown in the profit and loss account in 19X8 represents the
damages received by the company from a libel action against a newspaper.
(iv) No fixed assets were disposed of during the year.
14,571
2,490
11,541
28,602
19X6
£000
807
795
3,618
20,031 23,034
259,470
230,334
29,136
3,678
7,707
17,751
9,270
8,481
(15)
8,466
3,339
5,127
25,848
30,975
19X6
£000
147
345
5,325
8,259
5,472 8,604
23,130 43,920
19X7
£000
278,340
244,809
33,531
4,065
849
393
6,063
53,091
10,167
19,299
7,833
11,466
19X8
£000
372,753
346,695
26,058
8,151
14,082
3,825
2,601
1,224
489
4,989
16,455
1,713
3,738
3,672
12,717
-1,959
30,975
50,427
43,692 48,468
20,559 20,598 29,721
5,184
5,193 12,564
26,781
30,000
47,172
52,524 55,791 89,457
19X7
19X8
£000 £000
597
858
774
11,277
18,747
12,051
20,202
43,740 69,255
936
303
8,730
74,823 99,606
936
393
9,345

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