From a review of the information above identify the areas which you would concentrate on in your analysis of the postion of Bepler ltd. 2. Given below are the summarized accounts of Belper Ltd for the past five years. These formthe basis for the questions which follow19X719X819X6Summarized profit and loss accounts of Belper Ltd19X5£000£00019X4£000£000278,340372,753259,470116,232346,695244,809230,334101,67326,05833,53129,136SalesCost of salesTrading profit14,5598,1514,0653,6781,38014,08210,1677,707Depreciation2,65219,2993,82517,751Interest10,5272,6017,833Net profit before tax9,2701,74611,4661,224Taxation8,4818,781489Net profit after tax4,989(15)(870)Extraordinary items1,71316,4558,4667,9115,9133,7383,3393,6721,812801-1,95912,717DividendsRetained profits5,1276,0995,11230,97550,42725,848Retained at start of year19,74914,63743,692 48,46830,975Retained at end of year25,84819,749Notes(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.Summarized balance sheets of Belper Ltd19X419X519X619X7Fixed assets£000£00019X8£000 £000£000Freehold land and buildings14,05814,57120,559 20,598 29,721Leasehold land and buildings2,3492,4905,184Plant and machinery5,193 12,5648,08211,54126,781Total gross fixed assets30,00047,17224,48928,60252,524 55,791 89,457Depreciation freeholdDepreciation leasehold117597147345774Depreciation plant, etc.Total depreciation4,1978585,3258,2594,31411,27718,747Net fixed assets5,472 8,60420,17512,05120,20223,130 43,920Intangible fixed assets43,740 69,255GoodwillInvestments789807849Patents and trade marks486795936936393Current assets3,9723,6183033936,063Stock8,7309,34520,031 23,03453,09174,823 99,606Financial statement analysis£00093,93081,75012,1801,0232,7278,4302,5175,913 19X419X519X619X719X817,58924,693 60,270DebtorsBank and cash48,98766,7684,6986,8017,8393,2739,74742,31854,528 121,200 127,083 176,121Current liabilitiesCreditors16,19724,58855,65941,13072,831Taxation4597684,3022,7123,444Dividends8011,8123,3393,7383,672Bank loans and overdraft10,5814,02618,18029,31637,63828,038 31,19481,480 76,896 117,585Net current assets14,280 23,33439,72050,18758,53639,70251,684 90,945 103,896 138,465Financed byOrdinary share capital2,2292,8293,3966,7927,077Share premium accountRetained profits2,9317,53014,59811,24712,38719,74925,84830,975 50,427 48,468Revaluation reserves6,7356,7359,423Total equity and reservesLoans24,90936,20755,70475,201 77,35514,79315,477 35,241 28,695 61,11051,684 90,945 103,896 138,46539,702(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.

Every business or any organization have to analyze thoroughly the statements so that the company…

Answered: From a review of the information above…

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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From a review of the information above identify the areas which you would concentrate on in your analysis of the postion of Bepler ltd.

2. Given below are the summarized accounts of Belper Ltd for the past five years. These form
the basis for the questions which follow
19X7
19X8
19X6
Summarized profit and loss accounts of Belper Ltd
19X5
£000
£000
19X4
£000
£000
278,340
372,753
259,470
116,232
346,695
244,809
230,334
101,673
26,058
33,531
29,136
Sales
Cost of sales
Trading profit
14,559
8,151
4,065
3,678
1,380
14,082
10,167
7,707
Depreciation
2,652
19,299
3,825
17,751
Interest
10,527
2,601
7,833
Net profit before tax
9,270
1,746
11,466
1,224
Taxation
8,481
8,781
489
Net profit after tax
4,989
(15)
(870)
Extraordinary items
1,713
16,455
8,466
7,911
5,913
3,738
3,339
3,672
1,812
801
-1,959
12,717
Dividends
Retained profits
5,127
6,099
5,112
30,975
50,427
25,848
Retained at start of year
19,749
14,637
43,692 48,468
30,975
Retained at end of year
25,848
19,749
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.
Summarized balance sheets of Belper Ltd
19X4
19X5
19X6
19X7
Fixed assets
£000
£000
19X8
£000 £000
£000
Freehold land and buildings
14,058
14,571
20,559 20,598 29,721
Leasehold land and buildings
2,349
2,490
5,184
Plant and machinery
5,193 12,564
8,082
11,541
26,781
Total gross fixed assets
30,000
47,172
24,489
28,602
52,524 55,791 89,457
Depreciation freehold
Depreciation leasehold
117
597
147
345
774
Depreciation plant, etc.
Total depreciation
4,197
858
5,325
8,259
4,314
11,277
18,747
Net fixed assets
5,472 8,604
20,175
12,051
20,202
23,130 43,920
Intangible fixed assets
43,740 69,255
Goodwill
Investments
789
807
849
Patents and trade marks
486
795
936
936
393
Current assets
3,972
3,618
303
393
6,063
Stock
8,730
9,345
20,031 23,034
53,091
74,823 99,606
Financial statement analysis
£000
93,930
81,750
12,180
1,023
2,727
8,430
2,517
5,913

Transcribed Image Text:19X4 19X5 19X6 19X7 19X8 17,589 24,693 60,270 Debtors Bank and cash 48,987 66,768 4,698 6,801 7,839 3,273 9,747 42,318 54,528 121,200 127,083 176,121 Current liabilities Creditors 16,197 24,588 55,659 41,130 72,831 Taxation 459 768 4,302 2,712 3,444 Dividends 801 1,812 3,339 3,738 3,672 Bank loans and overdraft 10,581 4,026 18,180 29,316 37,638 28,038 31,194 81,480 76,896 117,585 Net current assets 14,280 23,334 39,720 50,187 58,536 39,702 51,684 90,945 103,896 138,465 Financed by Ordinary share capital 2,229 2,829 3,396 6,792 7,077 Share premium account Retained profits 2,931 7,530 14,598 11,247 12,387 19,749 25,848 30,975 50,427 48,468 Revaluation reserves 6,735 6,735 9,423 Total equity and reserves Loans 24,909 36,207 55,704 75,201 77,355 14,793 15,477 35,241 28,695 61,110 51,684 90,945 103,896 138,465 39,702 (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.

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