following is an extract from the trial balance of Tempo Ltd on 30 June 2022: £ Land and buildings 114 000 Equipment 210 000 Investment (80 000 shares of £1 each in Rhythm Ltd at cost price) 650 000 Inventory (30/6/2008 - £382 000) 418 000 Trade receivables (30/6/2021 – £180 000) 206 000 Cash and cash equivalents 92 000 Share capital: Ordinary share capital including premium 450 000 Preference share capital 200 000 Retained earnings: Balance – beginning of year 160 000 Retained profit for the year 40 000 12% Long term loan 420 000 Trade payables (30/6/2021 – £190 000) 210 000 Tax payable 110 000 Dividends payable 100 000 Additional information: 1. Issued share capital: - 400 000 ordinary shares of £1 each - 40 000 10% preference shares of £5 each. 2. Gross profit for the year amounted to £1 344 000 and represents 40% of turnover for the year. 3. All sales and all purchases are on credit. 4. Income from investment for the year amounted to £24 000. 5. The dividends payable represents the total amount of dividends declared on ordinary shares for the year. All preference dividends were paid up to date. 6. No further distribution of net profit other than dividends was made during the year. 7. No tax was outstanding at the beginning of the year. 8. The following ratios, calculated for the previous financial year, are available: Receivables collection period – 25 days Payables payment period – 30 days Number of days inventory on hand – 60 days REQUIRED: 1. Calculate the following ratios in respect of the year ended 30 June 2022: (Round off to two decimal points) a) Rate of return on investment b) Earnings per ordinary share c) Receivables collection period in days
he following is an extract from the
£
Land and buildings 114 000
Equipment 210 000
Investment (80 000 shares of £1 each in Rhythm Ltd at cost price) 650 000
Inventory (30/6/2008 - £382 000) 418 000
Trade receivables (30/6/2021 – £180 000) 206 000
Cash and cash equivalents 92 000
Share capital:
Ordinary share capital including premium 450 000
Balance – beginning of year 160 000
Retained profit for the year 40 000
12% Long term loan 420 000
Trade payables (30/6/2021 – £190 000) 210 000
Tax payable 110 000
Dividends payable 100 000
Additional information:
1. Issued share capital:
- 400 000 ordinary shares of £1 each
- 40 000 10% preference shares of £5 each.
2. Gross profit for the year amounted to £1 344 000 and represents 40% of turnover
for the year.
3. All sales and all purchases are on credit.
4. Income from investment for the year amounted to £24 000.
5. The dividends payable represents the total amount of dividends declared on
ordinary shares for the year. All preference dividends were paid up to date.
6. No further distribution of net profit other than dividends was made during the year.
7. No tax was outstanding at the beginning of the year.
8. The following ratios, calculated for the previous financial year, are available:
Receivables collection period – 25 days
Payables payment period – 30 days
Number of days inventory on hand – 60 days
REQUIRED:
1. Calculate the following ratios in respect of the year ended 30 June 2022: (Round
off to two decimal points)
a) Rate of
b) Earnings per ordinary share
c) Receivables collection period in days
d) Payables payment period in days
e) Number of days inventory on hand
2. Analyse and interpret the following ratios calculated above
a) Receivables collection period
b) Payables payment period
c) Number of days inventory on hand
Step by step
Solved in 4 steps
