The financial statements of Stone Limited for the most recent two years is shown below.Extract from statement of profit or loss for the year ended 30 April20192018£'000£'000224,000195,000(169,200)(136,500)54,80058,500(32,700)(38,040)(10,900)(12,680)(1.900)9,300RevenueCost of salesGross profitAdministrative costsDistribution costFinance cost-loan note interestStatement of financial position as at 30 April.AssetsNon-current assetsCurrent assets:InventoryTrade receivablesCash balanceTotal assetsEquity and liabilitiesOrdinary share capitalRetained earnings£'000201912,80024,6001,600£'00037,00039,00076,00016,00026,20042,200(1.380)6,4002018£'000 £'00028,6009,80021,6002,40033,80062.40016,00018,60034,600 Non-current liabilities:10% loan notesCurrent liabilities:Bank overdraftTrade payablesTaxation2,20015,00060016,000Net profit marginROCE (Capital employed equity +loan notes)Asset turnoverCurrent ratioQuick ratioGross profit marginAccount receivables collection periodAccount payables payment periodInventory turnover (Times)Gearing ratio1,60013,80040017,800Total equity and liabilities76,000The ratios for Stone Limited have been calculated below based on the previous yearfinancial statement and latest industry average ratios.Stone Ltd30 April 20183.99%16.69%4.19 times2.14:11.52:130.0%40 days17 days13.9times25.75%12,00015,80062,400IndustryAverage4.73%18.50%3.91 times1.90:11.27:135.23%52days49 days18.3times32.71%

Non-current liabilities: 10% loan notes Current liabilities: Bank overdraft Trade payables Taxation 2,200 15,000 600 16,000 Net profit margin ROCE (Capital employed equity +loan notes) Asset turnover Current ratio Quick ratio Gross profit margin Account receivables collection period Account payables payment period Inventory turnover (Times) Gearing ratio 17,800 Total equity and liabilities 76,000 The ratios for Stone Limited have been calculated below based on the previous year financial statement and latest industry average ratios. 1,600 13,800 400 Stone Ltd 30 April 2018 3.99% 16.69% 4.19 times 2.14:1 1.52:1 30.0% 40 days 17 days 13.9times 25.75% 12,000 15,800 62,400 Industry Average 4.73% 18.50% 3.91 times 1.90:1 1.27:1 35.23% 52days 49 days 18.3times 32.71%

Non-current liabilities: 10% loan notes Current liabilities: Bank overdraft Trade payables Taxation 2,200 15,000 600 16,000 Net profit margin ROCE (Capital employed equity +loan notes) Asset turnover Current ratio Quick ratio Gross profit margin Account receivables collection period Account payables payment period Inventory turnover (Times) Gearing ratio 17,800 Total equity and liabilities 76,000 The ratios for Stone Limited have been calculated below based on the previous year financial statement and latest industry average ratios. 1,600 13,800 400 Stone Ltd 30 April 2018 3.99% 16.69% 4.19 times 2.14:1 1.52:1 30.0% 40 days 17 days 13.9times 25.75% 12,000 15,800 62,400 Industry Average 4.73% 18.50% 3.91 times 1.90:1 1.27:1 35.23% 52days 49 days 18.3times 32.71%

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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