Income statements for the years ended 30 June 2018 £000 2,600 (1,560) 1,040 Sales revenue Cost of sales Gross profit Wages and salaries Overheads Depreciation Operating profit Interest payable Profit before taxation Taxation Profit for the year ASSETS Non-current assets Property, plant and equipment Current assets Inventories Trade receivables Cash at bank Total assets EQUITY AND LIABILITIES Equity Share capital: £1 shares fully paid Share premium Retained earnings (320) (260) Non-current liabilities Borrowings - 10% loan notes Current liabilities Trade payables Other payables (150) 310 Statement of financial position as at 30 June 2018 £000 (50) 260 (105) 155 1,265 250 105 380 735 2,000 490 260 350 1,100 500 300 100 400 2,000 2019 £000 3,500 (2,350) 1,150 (350) (200) (250) 350 (50) 300 (125) 175 2019 £000 1,525 400 145 115 660 2,185 490 260 450 1,200 500 375 110 485 2,185 Total equity and liabilities Dividends were paid on ordinary shares of £65,000 and £75,000 in respect of 2018 and 2019, respectively. Required: (a) Choose and calculate eight ratios that would be helpful in assessing the performance of Harridges Ltd. Use end-of-year values and calculate ratios for both 2018 and 2019. (b) Using the ratios calculated in (a) and any others you consider helpful, comment on the busi- ness's performance from the viewpoint of a prospective purchaser of a majority of shares.
Income statements for the years ended 30 June 2018 £000 2,600 (1,560) 1,040 Sales revenue Cost of sales Gross profit Wages and salaries Overheads Depreciation Operating profit Interest payable Profit before taxation Taxation Profit for the year ASSETS Non-current assets Property, plant and equipment Current assets Inventories Trade receivables Cash at bank Total assets EQUITY AND LIABILITIES Equity Share capital: £1 shares fully paid Share premium Retained earnings (320) (260) Non-current liabilities Borrowings - 10% loan notes Current liabilities Trade payables Other payables (150) 310 Statement of financial position as at 30 June 2018 £000 (50) 260 (105) 155 1,265 250 105 380 735 2,000 490 260 350 1,100 500 300 100 400 2,000 2019 £000 3,500 (2,350) 1,150 (350) (200) (250) 350 (50) 300 (125) 175 2019 £000 1,525 400 145 115 660 2,185 490 260 450 1,200 500 375 110 485 2,185 Total equity and liabilities Dividends were paid on ordinary shares of £65,000 and £75,000 in respect of 2018 and 2019, respectively. Required: (a) Choose and calculate eight ratios that would be helpful in assessing the performance of Harridges Ltd. Use end-of-year values and calculate ratios for both 2018 and 2019. (b) Using the ratios calculated in (a) and any others you consider helpful, comment on the busi- ness's performance from the viewpoint of a prospective purchaser of a majority of shares.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:77
The financial statements for Harridges Ltd are given below for the two years ended 30 June 2018
and 2019. Harridges Limited operates a department store in the centre of a small town.
Sales revenue
Cost of sales
Income statements for the years ended 30 June
2018
£000
2,600
(1,560)
1,040
Gross profit
Wages and salaries
Overheads
Depreciation
Operating profit
Interest payable
Profit before taxation
Taxation
Profit for the year
ASSETS
Non-current assets
Property, plant and equipment
Current assets
Inventories
Trade receivables
Cash at bank
Total assets
EQUITY AND LIABILITIES
Equity
Share capital: £1 shares fully paid
Share premium
Retained earnings
Trade payables
Other payables
Non-current liabilities
Borrowings 10% loan notes
Current liabilities
(320)
(260)
(150)
310
Statement of financial position as at 30 June
2018
£000
(50)
260
(105)
155
1,265
250
105
380
735
2,000
490
260
350
1,100
500
300
100
400
2,000
2019
£000
3,500
(2,350)
1,150
(350)
(200)
(250)
350
(50)
300
(125)
175
2019
£000
1,525
400
145
115
660
2,185
490
260
450
1,200
500
375
110
485
2,185
Total equity and liabilities
Dividends were paid on ordinary shares of £65,000 and £75,000 in respect of 2018 and 2019, respectively.
Required:
(a) Choose and calculate eight ratios that would be helpful in assessing the performance of
Harridges Ltd. Use end-of-year values and calculate ratios for both 2018 and 2019.
(b) Using the ratios calculated in (a) and any others you consider helpful, comment on the busi-
ness's performance from the viewpoint of a prospective purchaser of a majority of shares.
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