Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly the formulae used for each ratio. Return on capital employed Gross profit percentage Net profit percentage Quick/Acid test ratio Receivables collection period Earnings per share Using the additional information given and the ratios you calculated in part (a), write a brief report on the financial performance of F. Raser. Indicate in your report what additional information might be useful to help interpret the ratios. © List two factors F. Raser should consider in deciding whether to raise finance by issuing loan notes rather than issuing shares
Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly the formulae used for each ratio. Return on capital employed Gross profit percentage Net profit percentage Quick/Acid test ratio Receivables collection period Earnings per share Using the additional information given and the ratios you calculated in part (a), write a brief report on the financial performance of F. Raser. Indicate in your report what additional information might be useful to help interpret the ratios. © List two factors F. Raser should consider in deciding whether to raise finance by issuing loan notes rather than issuing shares
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
- Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly the formulae used for each ratio.
- Return on capital employed
- Gross profit percentage
- Net profit percentage
- Quick/Acid test ratio
- Receivables collection period
- Earnings per share
- Using the additional information given and the ratios you calculated in part (a), write a brief report on the financial performance of F. Raser. Indicate in your report what additional information might be useful to help interpret the ratios.
© List two factors F. Raser should consider in deciding whether to raise finance by issuing loan notes rather than issuing shares
![The ratio values for F. Raser for 2014 and 2015 as well as the current average ratio values for
the industry sector in which F. Raser operates are as follows:
Ratio
Historical Data
Industry Average
2014
2015
2016
Retum on capital employed (%)
Gross profit percentage (%)
Net profit percentage (%)
Quick/Acid test ratio
Receivables collectionperiod (days)
Eamings per share (cents)
16-2
14-7
16-2
30-4
34-7
32-3
19:3
17-7
17-3
1-5
1-1
1-5
32-0
44-0
35-0
18-0
13-0
15-0
Required:
(a) Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly
the fommulae used for eachratio.
www
Retum on capital employed
Gross pro fit percentage
Net profit percentage
(i)
(1)
(iv) Quick/Acid testratio
(v)
(vi) Eamings per share
Receivables collection period
(b) Using the additional infomation given and the ratios you calculated in part (a), write a
briefreport on the financial performance of F. Raser. Indicate in your report what
additional information might be usefil to help interpret the ratios.
© List two factors F. Raser should consider in deciding whether to raise finance by issuing
loannotes rather than issuing shares
+](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8719f079-dece-4779-b8fd-de4fe9c11486%2Fe6d05a40-9312-425a-bf3c-f709c3838865%2F0p7kqkv_processed.png&w=3840&q=75)
Transcribed Image Text:The ratio values for F. Raser for 2014 and 2015 as well as the current average ratio values for
the industry sector in which F. Raser operates are as follows:
Ratio
Historical Data
Industry Average
2014
2015
2016
Retum on capital employed (%)
Gross profit percentage (%)
Net profit percentage (%)
Quick/Acid test ratio
Receivables collectionperiod (days)
Eamings per share (cents)
16-2
14-7
16-2
30-4
34-7
32-3
19:3
17-7
17-3
1-5
1-1
1-5
32-0
44-0
35-0
18-0
13-0
15-0
Required:
(a) Calculate the following ratios for F. Raser for the year ended 31 May 2016. State clearly
the fommulae used for eachratio.
www
Retum on capital employed
Gross pro fit percentage
Net profit percentage
(i)
(1)
(iv) Quick/Acid testratio
(v)
(vi) Eamings per share
Receivables collection period
(b) Using the additional infomation given and the ratios you calculated in part (a), write a
briefreport on the financial performance of F. Raser. Indicate in your report what
additional information might be usefil to help interpret the ratios.
© List two factors F. Raser should consider in deciding whether to raise finance by issuing
loannotes rather than issuing shares
+
![F. Raser
Income statement for the year ended 31 May 2016
www
$000
Revenue
160
Cost of sales
(100)
Gross profit
Distribution & administrative expenses
Profit from operations
60
25
Finance cost
Profit before tax
20
Tax expense
Net profit for the period
(10)
10
F. Raser
Statement of Financial Position as at 31 May 2016
ww
$000
$00
Assets
Non-current as sets
150
Current assets
Inventory
Trade receivables
45
25
Cash and bank
75
Total Assets
225
Equity and liabilities
Capital and reserves
$1 Ordinary shares
100
Reserves
30
130
Non-current liabilities
10% loan notes
50
Current liabilities
Trade payables
30
Тахation
10
Dividends (for the year)
45
Total equity and liabilities
225](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8719f079-dece-4779-b8fd-de4fe9c11486%2Fe6d05a40-9312-425a-bf3c-f709c3838865%2Fl8zmd2s_processed.png&w=3840&q=75)
Transcribed Image Text:F. Raser
Income statement for the year ended 31 May 2016
www
$000
Revenue
160
Cost of sales
(100)
Gross profit
Distribution & administrative expenses
Profit from operations
60
25
Finance cost
Profit before tax
20
Tax expense
Net profit for the period
(10)
10
F. Raser
Statement of Financial Position as at 31 May 2016
ww
$000
$00
Assets
Non-current as sets
150
Current assets
Inventory
Trade receivables
45
25
Cash and bank
75
Total Assets
225
Equity and liabilities
Capital and reserves
$1 Ordinary shares
100
Reserves
30
130
Non-current liabilities
10% loan notes
50
Current liabilities
Trade payables
30
Тахation
10
Dividends (for the year)
45
Total equity and liabilities
225
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