Planet Ltd produces fridges and freezers, which are sold to retailers. The financial statements for the last three years are as follows:   Income statements for the year ending 31st December   2021 2022   £000 £000 Revenue 336,250 427,038 Cost of sales (126,675) (190,012) Gross profit 209,575 237,025 Administration expenses (73,290) (95,795) Distribution expenses (14,678) (8,720) Operating profit 121,407 121,931 Interest (8,750) (11,250) Profit before tax 118,142 166,326 Tax (22,531) (22,136) Profit for the year 90,126 88,545   Statements of financial position as at 31st December   2021 2022   £000 £000 Non-current assets     Property, plant and equipment 286,250 327,650 Current assets     Inventories 37,000 28,000 Trade receivables 42,000 43,500 Cash 19,632 24,570   98,632 96,070 Total assets 384,882 423,720       Current liabilities     Trade payables 34,000 28,750 Accruals 22,531 22,136 Tax liability 1,250 1,425   57,781 52,311 Non-current liabilities     Bank loan 175,000 225,000       Equity     Ordinary share capital of £1 (fully paid) 80,000 80,000 Retained earnings 72,101 66,409   152,101 146,409 Total equity and liabilities 384,882 423,720 Calculate the following financial ratios for the year 2022 The ratios for 2021 have been provided in the table below   Current ratio 1.71 :1     Quick ratio 1.07 :1      Receivables collection period 46 days

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Planet Ltd produces fridges and freezers, which are sold to retailers. The financial statements for the last three years are as follows:

 

Income statements for the year ending 31st December

 

2021

2022

 

£000

£000

Revenue

336,250

427,038

Cost of sales

(126,675)

(190,012)

Gross profit

209,575

237,025

Administration expenses

(73,290)

(95,795)

Distribution expenses

(14,678)

(8,720)

Operating profit

121,407

121,931

Interest

(8,750)

(11,250)

Profit before tax

118,142

166,326

Tax

(22,531)

(22,136)

Profit for the year

90,126

88,545

 

Statements of financial position as at 31st December

 

2021

2022

 

000

000

Non-current assets

 

 

Property, plant and equipment

286,250

327,650

Current assets

 

 

Inventories

37,000

28,000

Trade receivables

42,000

43,500

Cash

19,632

24,570

 

98,632

96,070

Total assets

384,882

423,720

 

 

 

Current liabilities

 

 

Trade payables

34,000

28,750

Accruals

22,531

22,136

Tax liability

1,250

1,425

 

57,781

52,311

Non-current liabilities

 

 

Bank loan

175,000

225,000

 

 

 

Equity

 

 

Ordinary share capital of £1 (fully paid)

80,000

80,000

Retained earnings

72,101

66,409

 

152,101

146,409

Total equity and liabilities

384,882

423,720

Calculate the following financial ratios for the year 2022
The ratios for 2021 have been provided in the table below 

 Current ratio

1.71 :1

 

 

Quick ratio

1.07 :1

 

 

 Receivables collection period

46 days

 

 

 Payables payment period

98 days

 

 

 Gearing ratio

53.50%

 

 

Interest coverage

13.88 times

 

 

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