Arden Books Limited is considering the acquisition of a bookbinding company to expand the publishing interests. Its chief executive has highlighted two possible target, Cliff Binding Limited and Harry Publishing Services Limited. The following information has been obtained for their most recent financial year: Profit & Sale Sales Cost of sales Gross profit margin Selling & distribution costs Administrative cost Profit before Tax Taxation Profit after Tax Statement of Financial Position Non-current assets Current assets Payables Cash Current Liabilities Creditors Overdraft Net current assets Capital and reserves Ordinary share capital Retained profits Long term loan Cliff Binding £ (i). Liquidity; (ii) profitability; (iii) capital structure (iv) efficiency. 16,000 10,000 18,000 28,000 46,000 26,000 5,000 31,000 £ 68,000 30,000 38,000 16,000 12,000 3,000 9,000 10,600 15,000 25,600 10,000 5,600 15,600 10,000 25,600 Harry Publishing £ 10,000 6,500 8,000 10,000 2,000 20,000 6,000 6,000 £ 61,500 38,000 23,500 16,500 7,000 1,750 5,250 8,300 14,000 22,00 12,000 10,300 22, 300 22,300 The Chief Executive favours Cliff Binding ahead of Harry Publishing, since it earned higher and generated high sales in the past financial year. As the company's financial adviser, you have been asked for your assessment of the two companies, from the viewpoint of
Arden Books Limited is considering the acquisition of a bookbinding company to expand the publishing interests. Its chief executive has highlighted two possible target, Cliff Binding Limited and Harry Publishing Services Limited. The following information has been obtained for their most recent financial year: Profit & Sale Sales Cost of sales Gross profit margin Selling & distribution costs Administrative cost Profit before Tax Taxation Profit after Tax Statement of Financial Position Non-current assets Current assets Payables Cash Current Liabilities Creditors Overdraft Net current assets Capital and reserves Ordinary share capital Retained profits Long term loan Cliff Binding £ (i). Liquidity; (ii) profitability; (iii) capital structure (iv) efficiency. 16,000 10,000 18,000 28,000 46,000 26,000 5,000 31,000 £ 68,000 30,000 38,000 16,000 12,000 3,000 9,000 10,600 15,000 25,600 10,000 5,600 15,600 10,000 25,600 Harry Publishing £ 10,000 6,500 8,000 10,000 2,000 20,000 6,000 6,000 £ 61,500 38,000 23,500 16,500 7,000 1,750 5,250 8,300 14,000 22,00 12,000 10,300 22, 300 22,300 The Chief Executive favours Cliff Binding ahead of Harry Publishing, since it earned higher and generated high sales in the past financial year. As the company's financial adviser, you have been asked for your assessment of the two companies, from the viewpoint of
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Arden Books Limited is considering the acquisition of a bookbinding company to expand the
publishing interests. Its chief executive has highlighted two possible target, Cliff Binding
Limited and Harry Publishing Services Limited.
The following information has been obtained for their most recent financial year:
Profit & Sale
Sales
Cost of sales
Gross profit margin
Selling & distribution costs
Administrative cost
Profit before Tax
Taxation
Profit after Tax
Statement of Financial Position
Non-current assets
Current assets
Payables
Cash
Current Liabilities
Creditors
Overdraft
Net current assets
Capital and reserves
Ordinary share capital
Retained profits
Long term loan
Cliff Binding
£
(i). Liquidity;
(ii) profitability;
(iii) capital structure
(iv) efficiency.
16,000
10,000
18,000
28,000
46,000
26,000
5,000
31,000
£
68,000
30,000
38,000
16,000
12,000
3,000
9,000
10,600
15,000
25,600
10,000
5,600
15,600
10,000
25,600
Harry Publishing
£
10,000
6,500
8,000
10,000
2,000
20,000
6,000
6,000
£
61,500
38,000
23,500
16,500
7,000
1,750
5,250
8,300
14,000
22,00
12,000
10,300
22, 300
22,300
The Chief Executive favours Cliff Binding ahead of Harry Publishing, since it earned higher
and generated high sales in the past financial year.
As the company's financial adviser, you have been asked for your assessment of the two
companies, from the viewpoint of
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