Highland is a brewing company, which has been in existence over the years. With your finance background, a friend has requested you with the interest to invest in the company. Presented below is the financial statement for Highland. Required: You are required to calculate and interpret all relevant ratios for Highland Company Limited, stating all assumptions made and showing all workings to assist your friend in making his decision. Highland Company Limited Statement of Comprehensive Income for the year ended 30th June 2021 2021 (GH¢ '000) 2020 (GH¢ '000) Revenue 321,017 292,318 Cost of Sales (228,793) (192,923) Gross Profit 92,224 99,395 Advertising and marketing expenses (28,986) (24,895) Administrative expenses (13,350) (14,022) Other expenses (20,810) (20,197) Other Income 2,085 339 Results from operating activities 31,163 40,620 Finance income 815 354 Finance cost (4,110) (7,757) Profit before taxation 27,868 33,217 Income tax expense (9,591) (8,212) Profit for the year 18,277 25,005 Other comprehensive income Other comprehensive income for the year 640 (445) Total comprehensive income for the year 18,917 24,560 Highland Company Limited Statement of Financial Position as at 30th June 2021 ASSETS 2021 GH¢'000 2020 GH¢'000 Property, plant, and equipment 225,900 161,329 Intangible assets 3,154 3,615 Total non-current assets 229,054 164,944 Inventories 45,108 33,537 Trade and other receivables 11,109 9,051 Amounts due from related companies 1,201 887 Cash and cash equivalents 11,519 35,390 Income tax asset - 290 Total current assets 68,937 79,155 Total assets 297,991 244,099 EQUITY AND LIABILITIES Share capital 96,252 92,252 Retained earnings 56,550 42,705 Total equity 152,802 138,957 Deferred tax liability 15,309 13,619 Medium-term loans 2,941 7,583 Obligations under finance lease 2,356 2,102 Employee benefit obligations 1,390 1,429 Total non-current liabilities 21,996 24,733 Bank Overdraft 15,688 - Income tax liability 146 - Short-term loans 5,670 10,333 Obligations under finance lease 959 596 Trade and other payables 40,251 49,078 Amounts due to related companies 28,424 20,402 Intercompany loan 24,543 - Provisions 7,512 - Total current liabilities 123,193 80,409 Total equity and liabilities 297,991 244,099 Additional Information a) The company has the policy to pay 2.5% of its total earnings for the year as dividends to ordinary shareholders. b) The company is listed on the Ghana Stock Exchange and its shares are currently trading at GH¢6.00 per share.
Highland is a brewing company, which has been in existence over the years. With your finance background, a friend has requested you with the interest to invest in the company. Presented below is the financial statement for Highland.
Required:
You are required to calculate and interpret all relevant ratios for Highland Company Limited, stating all assumptions made and showing all workings to assist your friend in making his decision.
Highland Company Limited
Statement of Comprehensive Income for the year ended 30th June 2021
|
|
2021 (GH¢ '000) |
2020 (GH¢ '000) |
|
Revenue |
321,017 |
292,318 |
|
Cost of Sales |
(228,793) |
(192,923) |
|
Gross Profit |
92,224 |
99,395 |
|
Advertising and marketing expenses |
(28,986) |
(24,895) |
|
Administrative expenses |
(13,350) |
(14,022) |
|
Other expenses |
(20,810) |
(20,197) |
|
Other Income |
2,085 |
339 |
|
Results from operating activities |
31,163 |
40,620 |
|
Finance income |
815 |
354 |
|
Finance cost |
(4,110) |
(7,757) |
|
Profit before |
27,868 |
33,217 |
|
Income tax expense |
(9,591) |
(8,212) |
|
Profit for the year |
18,277 |
25,005 |
|
Other comprehensive income |
|
|
|
Other comprehensive income for the year |
640 |
(445) |
|
Total comprehensive income for the year |
18,917 |
24,560 |
Highland Company Limited
|
ASSETS |
2021 GH¢'000 |
2020 GH¢'000 |
|
Property, plant, and equipment |
225,900 |
161,329 |
|
Intangible assets |
3,154 |
3,615 |
|
Total non-current assets |
229,054 |
164,944 |
|
Inventories |
45,108 |
33,537 |
|
Trade and other receivables |
11,109 |
9,051 |
|
Amounts due from related companies |
1,201 |
887 |
|
Cash and cash equivalents |
11,519 |
35,390 |
|
Income tax asset |
- |
290 |
|
Total current assets |
68,937 |
79,155 |
|
Total assets |
297,991 |
244,099 |
|
EQUITY AND LIABILITIES |
|
|
|
Share capital |
96,252 |
92,252 |
|
|
56,550 |
42,705 |
|
Total equity |
152,802 |
138,957 |
|
|
15,309 |
13,619 |
|
Medium-term loans |
2,941 |
7,583 |
|
Obligations under finance lease |
2,356 |
2,102 |
|
Employee benefit obligations |
1,390 |
1,429 |
|
Total non-current liabilities |
21,996 |
24,733 |
|
Bank Overdraft |
15,688 |
- |
|
Income tax liability |
146 |
- |
|
Short-term loans |
5,670 |
10,333 |
|
Obligations under finance lease |
959 |
596 |
|
Trade and other payables |
40,251 |
49,078 |
|
Amounts due to related companies |
28,424 |
20,402 |
|
Intercompany loan |
24,543 |
- |
|
Provisions |
7,512 |
- |
|
Total current liabilities |
123,193 |
80,409 |
|
|
|
|
|
Total equity and liabilities |
297,991 |
244,099 |
Additional Information
- a) The company has the policy to pay 2.5% of its total earnings for the year as dividends to ordinary shareholders.
- b) The company is listed on the Ghana Stock Exchange and its shares are currently trading at GH¢6.00 per share.
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