EcobankBilocan Bank523DebtorsBank and cashCurrent liabilitiesCreditorsTaxationDividendsBank loans and overdraftNet current assetsFinanced byOrdinary share capitalShare premium accountRetained profitsRevaluation reservesTotal equity and reservesLoans19X-417,5894,69842,31816,19745980110,58128,03814,28039,7022,2292,93119,74924,90914,79339,70219X524,6936,80124,5887681,8124,02631,19423,33451,6842,8297,53025,84819X660,2707,839121,20055,6594,3023,33918,18081,48039,72090,94519X719X848,98766,7683,2739,747127,083 176,12141,1302,7123,73872,8313,4443,67229,31637,63876,896 117,58550,187 58,536103,896 138,4653,3966,7927,07714,598 11,24712,38730,975 50,42748,4686,7356,7359,42336,20755,70475,20177,35515,47735,24128,695 61,11051,684 90,945 103,896 138,465.From a review of the information above identify the areas which you would concentrateon 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 informationdisclosed by your analysis.Using whatever form of analysis you consider appropriate comment on the financial riskprofile of Belper Ltd for the five years under review.Based on your analysis write a brief report for the bank advising them on whether tocontinue to provide finance for Belper Ltd.- Apart from the information arising from your analysis what other information would youadvise the bank to consider when making its decision?Discuss how your analysis would have been altered if you were carrying out the analysison behalf of a prospective shareholder. EcobankPole Pan African BankS740 5523VISAAwa TaakFinancial statement analysis.2.Given below are the summarized accounts of Helper Ltd for the past five years. These formthe basis for the questions which follow.Summarized profit and loss accounts of Belper Ltd19X5[000SalesCost of salesTrading profitDepreciationInterestNet profit before taxTaxationNet profit after taxExtraordinary items.DividendsRetained profitsRetained at start of yearRetained at end of yearFixed assetsFreehold land and buildingsLeasehold land and buildings19X4£000Plant and machineryTotal gross fixed assetsgrossDepreciation freeholdDepreciation leaseholdDepreciation plant, etc.Total depreciationNet fixed assetsTHIntangible fixed assetsGoodwillAhvestments93,93081,75012.180Patents and trade marksCurrent assetsStock1,0232,7278,4302,5175,9135,9138015.11214,63719,749Summarized balance sheets of Belper Ltd19X4£0001174,1974,31420.175116,232101,67314,5591,3802,65210.5271,7468,781(870)K7894863,97220,0317.9111,8126,09919,74925,84814,0582,3492,4908,082 11,54124,48928,602119X5£00019X6£000259,470230,33429,1363,6787,70717,7519,2708,481(15)8,4663,3395,127Notes(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.25,84830,97519X6£00019X7£000278,340244,80933,5314,06510,16719,2997,8335,18426,78152,52411,4664,98919X8£000372,753346,69526,0588,15114,0823,8252,6011,2244891,7133,672-1,95916,4553,73812,71730,97550,42743,692 48,46814,571 20,559 20,59829,7215,19312,56430,000 47,17255,791 89,45719X7 19X8£000£0005971473457748585,325 8,25911,27718,7475,472 8,60412,05120,20223,130 43,920 43,740 69,255807849 9369367953933033933,618 6,0638,7309,34523.034 53.091 74,823 99,606

While analysing the financial statements there are few areas which drew attention , based on which…

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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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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

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