Calculate: (i) Return on capital employed(ii) Net profit margin(iii) Current ratio For the year ended31 Dec. 2019£006,000For the year ended31 Dec. 2018£000£00£000Sales revenueCost of salesOpening inventory4,8001,2002,700450Purchases4,8005,250(900)3,900Less: Closing inventoryGross profitOperating expensesFinance costNet profit(450)(3,450)(4,350)1,650(675)(300)6751,350(600)(150)600As at year to 31 Dec.2018As at year to 31 Dec.2019Statement of financial position£000£000£000£000Non-current assets2,9556,000Current assetsInventoryReceivables – trade4509009075750120010515PrepaymentsCash2,0701,5154,4708,070Issued share capitalShare premium accountRetained earnings9003009003001,6501,1252,3252,850Non-current liabilities10% loan notesCurrent liabilities1,5003,000Payables – tradeAccruals5702,100120756452,2204,4708,070

(i) Return on capital employed = EBITTotal assets-Total current liabilities For 2018: ROCE =…

For the year ended 31 Dec. 2018 £000 For the year ended 31 Dec. 2019 £000 £000 £000 6,000 Sales revenue Cost of sales Opening inventory Purchases 4,800 1,200 2,700 450 4,800 3,900 (450) 5,250 (4,350) Less: Closing inventory Gross profit Operating expenses Finance cost Net profit (3,450) 1,350 (600) (150) 600 (900) 1,650 (675) (300) 675 As at year to 31 Dec. 2018 £000 As at year to 31 Dec. 2019 £000 6,000 Statement of financial position £000 £000 Non-current assets 2,955 Current assets Inventory Receivables – trade Prepayments Cash 450 900 90 75 750 1200 105 15 2,070 8,070 900 300 1,650 2,850 1,515 4,470 Issued share capital Share premium account Retained earnings 900 300 1,125 2,325 Non-current liabilities 10% loan notes Current liabilities Payables – trade Accruals 1,500 3,000 570 75 2,100 120 2,220 645 4,470 8,070

For the year ended 31 Dec. 2018 £000 For the year ended 31 Dec. 2019 £000 £000 £000 6,000 Sales revenue Cost of sales Opening inventory Purchases 4,800 1,200 2,700 450 4,800 3,900 (450) 5,250 (4,350) Less: Closing inventory Gross profit Operating expenses Finance cost Net profit (3,450) 1,350 (600) (150) 600 (900) 1,650 (675) (300) 675 As at year to 31 Dec. 2018 £000 As at year to 31 Dec. 2019 £000 6,000 Statement of financial position £000 £000 Non-current assets 2,955 Current assets Inventory Receivables – trade Prepayments Cash 450 900 90 75 750 1200 105 15 2,070 8,070 900 300 1,650 2,850 1,515 4,470 Issued share capital Share premium account Retained earnings 900 300 1,125 2,325 Non-current liabilities 10% loan notes Current liabilities Payables – trade Accruals 1,500 3,000 570 75 2,100 120 2,220 645 4,470 8,070

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

Calculate:

(i) Return on capital employed
(ii) Net profit margin
(iii) Current ratio

For the year ended
31 Dec. 2019
£00
6,000
For the year ended
31 Dec. 2018
£000
£00
£000
Sales revenue
Cost of sales
Opening inventory
4,800
1,200
2,700
450
Purchases
4,800
5,250
(900)
3,900
Less: Closing inventory
Gross profit
Operating expenses
Finance cost
Net profit
(450)
(3,450)
(4,350)
1,650
(675)
(300)
675
1,350
(600)
(150)
600
As at year to 31 Dec.
2018
As at year to 31 Dec.
2019
Statement of financial position
£000
£000
£000
£000
Non-current assets
2,955
6,000
Current assets
Inventory
Receivables – trade
450
900
90
75
750
1200
105
15
Prepayments
Cash
2,070
1,515
4,470
8,070
Issued share capital
Share premium account
Retained earnings
900
300
900
300
1,650
1,125
2,325
2,850
Non-current liabilities
10% loan notes
Current liabilities
1,500
3,000
Payables – trade
Accruals
570
2,100
120
75
645
2,220
4,470
8,070

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