Financial statement analysis2. Given below are the summarized accounts of Belper Ltd for the past five years. Thesethe basis for the questions which follow.Summarized profit and loss accounts of Belper LtdSalesCost of salesTrading profitDepreciationInterestNet profit before taxTaxationNet profit after taxExtraordinary itemsDividendsRetained profitsRetained at start of yearRetained at end of yearFixed assetsFreehold land and buildingsLeasehold land and buildingsPlant and machineryTotal gross fixed assetsDepreciation freeholdDepreciation leaseholdDepreciation plant, etc.Total depreciationNet fixed assetsIntangible fixed assetsGoodwillInvestmentsPatents and trade marksCurrent assetsStockDebtorsBank and cashCurrent liabilitiesCreditorsTaxationDividendsBank loans and overdraft19X4Net current assets£000Financed byOrdinary share capitalShare premium accountRetained profitsRevaluation reserves93,93081,75012,1801,0232,7278,4302,5175,913Summarized balance sheets of Belper Ltd19X4£0005,9138015,1127,9111,8126,09914,63719,74919,749 25,848116,232101,67314,5591,3802,6521174,1974,31420,17519X5£0007894863,97220,03110,5271,7468,781(870)16,19745980114,0582,3498,082 11,54124,489 28,60210,58128,03819X5£00019x6£000259,470230,33429,1363,6787,707NotesDuring 19X8 some of the freehold properties were revalued.()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.17,7519,2708,4818,4663,3395,127(15)25,84830.97514,571 20,5592,4905,18419X419X517,589 24,6934,6986,80142,31854,52819X78078497953933,6186,06323,034 53,091£0002,2292,93119,749 25,8482,8297,530278,340244,80933,5314,06510,16719,2997.83311,4664.98916,4553,73812,71730,97543,69226,78130,00052,524 55,79119X6 19X7 19X8£000£000£0001473455,3258,2595,472 8,604 12,05123,13043,92043,74020,598 29,7215,19319X8£0009363038,730372,753346.69526,0588,15114,0823,8252,6011,22448974,8231,7133,672-1,95950,42748,46859777485811,277 18,74720,20269,25555,6594,3023,33912,56447,17289,4573,39614,59830,9756,73524,5887681,8124,02631,19414,280 23,334 39,720 50,187 58,53639,702 51,68490,945 103,896 138,4659363939,34599,60619X619X7 19X860,27048,987 66,7687,8393,273 9.747121,200 127,083 176,121CS CamScanner41,130 72,8312,7123,4443,7383.67218,180 29,316 37,63881,480 76,896 117,5856,792 7,07711,247 12,38750,427 48,4686,735 9,423 7:18Back FSA FINAL ASSIGNMENT.pdfInvestmentsPatents and trade marksCurrent assetsStockDebtorsBank and cashCurrent liabilitiesCreditorsTaxationDividendsBank loans and overdraftNet current assetsFinanced byOrdinary share capitalShare premium accountRetained profitsRevaluation reservesTotal equity and reservesLoansA703OU/4867953,972 3,61820.031 23,0348493936,06353,09116,19745980119X419X617,589 24,693 60,2704,6987,8396,80154,528 121,20042,31819X52,2292,93119,74924,5887681,81210,5814,02628,038 31,194 81,48014,280 23,33439,70251,6849363038,73074,823 99,6062,8297,53025,8489363939,345CS CamScanner19X7 19X848,98766,7683,273 9,747127,083 176,12155,6594,3023,33918,180 29,316 37,63876,896 117,58550,187 58,53639,72090,945 103,896 138,46541,1302,7123,73872,8313,4443,6723,3966,792 7,07714,598 11,247 12,38730,97550,427 48,4686,7356,7359,42336,207 55,70415,47724,90914,79339,702 51,684 90,945 103,896 138,46575,20177,35535,241 28,695 61,110(a) From a review of the information above identify the areas which you would concentrateon in your analysis of the position of Belper Ltd.(b) Produce common size profit and loss accounts for the five years and analyse these state-ments with particular reference to the profitability of Belper.(c) Calculate the trends in the Sales and Cost of sales and comment on the informationdisclosed by your analysis.(d) Using whatever form of analysis you consider appropriate comment on the financial riskprofile of Belper Ltd for the five years under review.(e) Based on your analysis write a brief report for the bank advising them on whether tocontinue to provide finance for Belper Ltd.f) Apart from the information arising from your analysis what other information would youadvise the bank to consider when making its decision?g) Discuss how your analysis would have been altered if you were carrying out the analysison behalf of a prospective shareholder.CS CamScannerA

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FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Transcribed Image Text:7:18 Back FSA FINAL ASSIGNMENT.pdf Investments Patents and trade marks Current assets Stock 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 A 703 OU/ 486 795 3,972 3,618 20.031 23,034 849 393 6,063 53,091 16,197 459 801 19X4 19X6 17,589 24,693 60,270 4,698 7,839 6,801 54,528 121,200 42,318 19X5 2,229 2,931 19,749 24,588 768 1,812 10,581 4,026 28,038 31,194 81,480 14,280 23,334 39,702 51,684 936 303 8,730 74,823 99,606 2,829 7,530 25,848 936 393 9,345 CS CamScanner 19X7 19X8 48,987 66,768 3,273 9,747 127,083 176,121 55,659 4,302 3,339 18,180 29,316 37,638 76,896 117,585 50,187 58,536 39,720 90,945 103,896 138,465 41,130 2,712 3,738 72,831 3,444 3,672 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 15,477 24,909 14,793 39,702 51,684 90,945 103,896 138,465 75,201 77,355 35,241 28,695 61,110 (a) From a review of the information above identify the areas which you would concentrate on in your analysis of the position of Belper Ltd. (b) Produce common size profit and loss accounts for the five years and analyse these state- ments with particular reference to the profitability of Belper. (c) Calculate the trends in the Sales and Cost of sales and comment on the information disclosed by your analysis. (d) Using whatever form of analysis you consider appropriate comment on the financial risk profile of Belper Ltd for the five years under review. (e) Based on your analysis write a brief report for the bank advising them on whether to continue to provide finance for Belper Ltd. f) Apart from the information arising from your analysis what other information would you advise the bank to consider when making its decision? g) Discuss how your analysis would have been altered if you were carrying out the analysis on behalf of a prospective shareholder. CS CamScanner A

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