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 oans 19X-4 17,589 4,698 42,318 16,197 459 801 10,581 28,038 14,280 39,702 2,229 2,931 19,749 19X5 19X6 24,693 60,270 6,801 7,839 121,200 24,588 55,659 768 4,302 3,339 18,180 1,812 4,026 31,194 81,480 23,334 39,720 51,684 90,945 2,829 3,396 7,530 14,598 25,848 30,975 6,735 24,909 36,207 55,704 14,793 15,477 35,241 39,702 51,684 19X7 19X8 48,987 66,768 3,273 9,747 127,083 176,121 41,130 72,831 2,712 3,444 3,738 3,672 29,316 37,638 76,896 117,585 50,187 58,536 103,896 138,465 7,077 6,792 11,247 12,387 50,427 48,468 6,735 9,423 75,201 77,355 28,695 61,110 90,945 103,896 138,465

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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Ecobank
Bilocan Bank
523
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
19X-4
17,589
4,698
42,318
16,197
459
801
10,581
28,038
14,280
39,702
2,229
2,931
19,749
24,909
14,793
39,702
19X5
24,693
6,801
24,588
768
1,812
4,026
31,194
23,334
51,684
2,829
7,530
25,848
19X6
60,270
7,839
121,200
55,659
4,302
3,339
18,180
81,480
39,720
90,945
19X7
19X8
48,987
66,768
3,273
9,747
127,083 176,121
41,130
2,712
3,738
72,831
3,444
3,672
29,316
37,638
76,896 117,585
50,187 58,536
103,896 138,465
3,396
6,792
7,077
14,598 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.
From a review of the information above identify the areas which you would concentrate
on in your analysis of the position of Belper Ltd.
Produce common size profit and loss accounts for the five years and analyse these state-
ments with particular reference to the profitability of Belper.
Calculate the trends in the Sales and Cost of sales and comment on the information
disclosed by your analysis.
Using whatever form of analysis you consider appropriate comment on the financial risk
profile of Belper Ltd for the five years under review.
Based on your analysis write a brief report for the bank advising them on whether to
continue to provide finance for Belper Ltd.
- Apart from the information arising from your analysis what other information would you
advise the bank to consider when making its decision?
Discuss how your analysis would have been altered if you were carrying out the analysis
on behalf of a prospective shareholder.
Transcribed Image Text:Ecobank Bilocan Bank 523 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 19X-4 17,589 4,698 42,318 16,197 459 801 10,581 28,038 14,280 39,702 2,229 2,931 19,749 24,909 14,793 39,702 19X5 24,693 6,801 24,588 768 1,812 4,026 31,194 23,334 51,684 2,829 7,530 25,848 19X6 60,270 7,839 121,200 55,659 4,302 3,339 18,180 81,480 39,720 90,945 19X7 19X8 48,987 66,768 3,273 9,747 127,083 176,121 41,130 2,712 3,738 72,831 3,444 3,672 29,316 37,638 76,896 117,585 50,187 58,536 103,896 138,465 3,396 6,792 7,077 14,598 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. From a review of the information above identify the areas which you would concentrate on in your analysis of the position of Belper Ltd. Produce common size profit and loss accounts for the five years and analyse these state- ments with particular reference to the profitability of Belper. Calculate the trends in the Sales and Cost of sales and comment on the information disclosed by your analysis. Using whatever form of analysis you consider appropriate comment on the financial risk profile of Belper Ltd for the five years under review. Based on your analysis write a brief report for the bank advising them on whether to continue to provide finance for Belper Ltd. - Apart from the information arising from your analysis what other information would you advise the bank to consider when making its decision? Discuss how your analysis would have been altered if you were carrying out the analysis on behalf of a prospective shareholder.
Ecobank
Pole Pan African Bank
S
740 5523
VISA
Awa Taak
Financial statement analysis.
2.
Given below are the summarized accounts of Helper 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
19X4
£000
Plant and machinery
Total gross fixed assets
gross
Depreciation freehold
Depreciation leasehold
Depreciation plant, etc.
Total depreciation
Net fixed assets
THIntangible fixed assets
Goodwill
Ahvestments
93,930
81,750
12.180
Patents and trade marks
Current assets
Stock
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
117
4,197
4,314
20.175
116,232
101,673
14,559
1,380
2,652
10.527
1,746
8,781
(870)
K
789
486
3,972
20,031
7.911
1,812
6,099
19,749
25,848
14,058
2,349
2,490
8,082 11,541
24,489
28,602
1
19X5
£000
19X6
£000
259,470
230,334
29,136
3,678
7,707
17,751
9,270
8,481
(15)
8,466
3,339
5,127
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.
25,848
30,975
19X6
£000
19X7
£000
278,340
244,809
33,531
4,065
10,167
19,299
7,833
5,184
26,781
52,524
11,466
4,989
19X8
£000
372,753
346,695
26,058
8,151
14,082
3,825
2,601
1,224
489
1,713
3,672
-1,959
16,455
3,738
12,717
30,975
50,427
43,692 48,468
14,571 20,559 20,598
29,721
5,193
12,564
30,000 47,172
55,791 89,457
19X7 19X8
£000
£000
597
147
345
774
858
5,325 8,259
11,277
18,747
5,472 8,604
12,051
20,202
23,130 43,920 43,740 69,255
807
849 936
936
795
393
303
393
3,618 6,063
8,730
9,345
23.034 53.091 74,823 99,606
Transcribed Image Text:Ecobank Pole Pan African Bank S 740 5523 VISA Awa Taak Financial statement analysis. 2. Given below are the summarized accounts of Helper 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 19X4 £000 Plant and machinery Total gross fixed assets gross Depreciation freehold Depreciation leasehold Depreciation plant, etc. Total depreciation Net fixed assets THIntangible fixed assets Goodwill Ahvestments 93,930 81,750 12.180 Patents and trade marks Current assets Stock 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 £000 117 4,197 4,314 20.175 116,232 101,673 14,559 1,380 2,652 10.527 1,746 8,781 (870) K 789 486 3,972 20,031 7.911 1,812 6,099 19,749 25,848 14,058 2,349 2,490 8,082 11,541 24,489 28,602 1 19X5 £000 19X6 £000 259,470 230,334 29,136 3,678 7,707 17,751 9,270 8,481 (15) 8,466 3,339 5,127 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. 25,848 30,975 19X6 £000 19X7 £000 278,340 244,809 33,531 4,065 10,167 19,299 7,833 5,184 26,781 52,524 11,466 4,989 19X8 £000 372,753 346,695 26,058 8,151 14,082 3,825 2,601 1,224 489 1,713 3,672 -1,959 16,455 3,738 12,717 30,975 50,427 43,692 48,468 14,571 20,559 20,598 29,721 5,193 12,564 30,000 47,172 55,791 89,457 19X7 19X8 £000 £000 597 147 345 774 858 5,325 8,259 11,277 18,747 5,472 8,604 12,051 20,202 23,130 43,920 43,740 69,255 807 849 936 936 795 393 303 393 3,618 6,063 8,730 9,345 23.034 53.091 74,823 99,606
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