AA LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR TO 31 DECEMBER 2014 Sales 2013 GHS’000 160 2014 GHS’000 200 Cost of goods sold (96) (114) Gross Profit 64 86 Operating expenses (30) (34) Debenture Interest (5) (5) Net profit before tax 29 47 Tax (9) (12) Net profit after tax 20 35 Dividend paid: Preference shares (2) (2) Ordinary shares (8) (10) (10) (12) Retained profit 10 23 STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2014 Non-current assets (@ net book value) 2013 GHS’000 300 2014 GHS’000 320 Current Assets: Inventories 15 20 Trade debtors 40 50 Cash and bank 3 1 58 71 Current Liabilities: Trade creditors (25) (35) Net current assets 33 36 333 356 Capital and reserves: Share capital (GHS1 ordinary shares) 200 200 Preference shares (GHS1 shares; 8%) 25 25 Retained earnings 58 81 Long-term Liabilities: 283 306 10% Debentures 50 50 333 356 Additional information: All sales and all purchases are on credit terms. The closing inventory at 31 December 2012 was GHS20,000. There were no accruals or prepayments at the end of either 2013 or 2014. Assume that both the tax and the dividends had been paid before the end of the year. The market price of the ordinary shares at the end of both years was estimated to be GHS1.26 and GHS2.97 respectively. REQUIRED: (a) Calculate the following ratios for both 2013 and 2014. (i) Liquidity ratios: current ratio and acid test ratio. (ii) Profitability: return on capital employed using profit before tax and gross profit ratio. (iii) Efficiency ratios: inventory turnover ratio, trade debtors’ collection period and trade creditors’ payment period. (iv) Investment ratios: dividend yield, dividend per share and earnings per share.
AA LIMITED
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR TO 31 DECEMBER 2014
|
Sales |
2013
GHS’000
160 |
2014
GHS’000
200 |
|
Cost of goods sold |
(96) |
(114) |
|
Gross Profit |
64 |
86 |
|
Operating expenses |
(30) |
(34) |
|
Debenture Interest |
(5) |
(5) |
|
Net profit before tax |
29 |
47 |
|
Tax |
(9) |
(12) |
|
Net profit after tax |
20 |
35 |
|
Dividend paid: |
|
|
|
|
(2) |
(2) |
|
Ordinary shares |
(8) |
(10) |
|
|
(10) |
(12) |
|
Retained profit |
10 |
23 |
|
Non-current assets (@ net book value) |
2013
GHS’000
300 |
2014
GHS’000
320 |
|
Current Assets:
Inventories |
15 |
20 |
|
Trade debtors |
40 |
50 |
|
Cash and bank |
3 |
1 |
|
|
58 |
71 |
|
Current Liabilities: |
|
|
|
Trade creditors |
(25) |
(35) |
|
Net current assets |
33 |
36 |
|
|
333 |
356 |
|
Capital and reserves:
Share capital (GHS1 ordinary shares) |
200 |
200 |
|
Preference shares (GHS1 shares; 8%) |
25 |
25 |
|
|
58 |
81 |
|
Long-term Liabilities: |
283 |
306 |
|
10% Debentures |
50 |
50 |
|
|
333 |
356 |
Additional information:
- All sales and all purchases are on credit terms.
- The closing inventory at 31 December 2012 was GHS20,000.
- There were no accruals or prepayments at the end of either 2013 or 2014.
- Assume that both the tax and the dividends had been paid before the end of the year.
- The market price of the ordinary shares at the end of both years was estimated to be GHS1.26 and GHS2.97 respectively.
REQUIRED:
(a) Calculate the following ratios for both 2013 and 2014.
(i)
(ii) Profitability: return on capital employed using profit before tax and gross profit ratio.
(iii) Efficiency ratios: inventory turnover ratio, trade debtors’ collection period and trade creditors’ payment period.
(iv) Investment ratios: dividend yield, dividend per share and earnings per share.
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