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Hello! look at the attached images and answer: (a) Calculate ratios for the year ended 31 December 2021 (showing your workings) for Primrose Plc, equivalent to those provided above.  i. Return on year-end capital employed ii. Net asset turnover iii. Gross profit margin

Hello! look at the attached images and answer: (a) Calculate ratios for the year ended 31 December 2021 (showing your workings) for Primrose Plc, equivalent to those provided above.  i. Return on year-end capital employed ii. Net asset turnover iii. Gross profit margin

FINANCIAL ACCOUNTING
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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Hello! look at the attached images and answer:

(a) Calculate ratios for the year ended 31 December 2021 (showing your workings) for Primrose Plc, equivalent to those provided above. 

i. Return on year-end capital employed

ii. Net asset turnover

iii. Gross profit margin

iv. Net profit margin

v. Current ratio

vi. Closing inventory holding period

vii. Trade receivables’ collection period

viii. Trade payables’ payment period

ix. Dividend yield

x. Dividend cover

(b) Analyse the financial performance and position of Primrose Plc for the year ended 31 December 2021 compared to 31 December 2020. 

(c) Explain the uses and the general limitations of ratio analysis. 

 

Thanks a lot!

Notes: (i) Primrose Plc received £120 million from the sale of plant that had a carrying amount of £80 million at the date of its sale. (ii) The market price of Primrose Plc's shares throughout the year averaged £3.75 each. There were no issues or redemption of shares or loans during the year. (iii) (iv) Dividends paid during the year ended 31 December 2021 amounted to £90 million, maintaining the same dividend paid in the year ended 31 December 2020. Below are ratios calculated for the year ended 31 December 2020. Return on year-end capital employed (profit before interest and tax over total assets less current liabilities) 28.1% Net asset (equal to capital employed) turnover 4 times Gross profit margin 17% 6.3% Net profit (before tax) margin Current ratio 1.6:1 46 days 45 days Closing inventory holding period Trade receivables' collection period Trade payables' payment period Dividend yield 55 days 3.75% Dividend cover 2 times
Transcribed Image Text:Notes: (i) Primrose Plc received £120 million from the sale of plant that had a carrying amount of £80 million at the date of its sale. (ii) The market price of Primrose Plc's shares throughout the year averaged £3.75 each. There were no issues or redemption of shares or loans during the year. (iii) (iv) Dividends paid during the year ended 31 December 2021 amounted to £90 million, maintaining the same dividend paid in the year ended 31 December 2020. Below are ratios calculated for the year ended 31 December 2020. Return on year-end capital employed (profit before interest and tax over total assets less current liabilities) 28.1% Net asset (equal to capital employed) turnover 4 times Gross profit margin 17% 6.3% Net profit (before tax) margin Current ratio 1.6:1 46 days 45 days Closing inventory holding period Trade receivables' collection period Trade payables' payment period Dividend yield 55 days 3.75% Dividend cover 2 times
Primrose Plc's summarised financial statements for the year ended 31 December 2021 are set out below: Income statement £million Revenue (25% cash sales) 4,000 Cost of sales (3,450) Gross profit 550 Operating expenses (370) 180 Profit on disposal of plant (note (i)) 40 Finance charges (20) Profit before tax Income tax expense Profit for the period Statement of financial position Non-current assets Property, plant and equipment (note (i)) Current assets Inventory Trade receivables Bank Total assets Equity and liabilities Equity shares of 25 pence Retained earnings Non-current liabilities 8% loan notes Current liabilities Bank overdraft Trade payables Current tax payable Total equity and liabilities £million 250 360 nil 10 430 40 200 (50) 150 £million 550 610 1,160 100 380 480 200 480 1,160
Transcribed Image Text:Primrose Plc's summarised financial statements for the year ended 31 December 2021 are set out below: Income statement £million Revenue (25% cash sales) 4,000 Cost of sales (3,450) Gross profit 550 Operating expenses (370) 180 Profit on disposal of plant (note (i)) 40 Finance charges (20) Profit before tax Income tax expense Profit for the period Statement of financial position Non-current assets Property, plant and equipment (note (i)) Current assets Inventory Trade receivables Bank Total assets Equity and liabilities Equity shares of 25 pence Retained earnings Non-current liabilities 8% loan notes Current liabilities Bank overdraft Trade payables Current tax payable Total equity and liabilities £million 250 360 nil 10 430 40 200 (50) 150 £million 550 610 1,160 100 380 480 200 480 1,160
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