Romans iii gearing ratio
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Romans iii gearing ratio
Transcribed Image Text:The following information relates to Zalip limited and Avela limited which operates
wholesale stores as at June 2020:
Statement of financial position as at 30 June 2020
Zalip Limited – Shs
"Million
Avela Limited - Shs
"Million"
Non - Current assets:
Land and buildings
Fixtures and fittings
510
91.2
601.2
360
87
447
Current assets:
Inventories
Trade receivables
Cash bank
592
176.4
84.6
853
1,300
403
| 321.9
91.6
816.5
1,417.7
Total Assets
Equity and Liabilities:
Ordinary shares (sh 1 each)
Retained earnings
Total equity
Non- current Liabilities:
Borrowings - Loan notes
Current Liabilities:
| Trade payables
Taxation
320
367.6
687.6
250
624.6
874.6
190
250
406.4
275.7
16
17.4
422.4
293.1
Total equity and liabilities
Income statement for the year ended 30 June 2020
Avela Limited – Shs
"Million
Zalip Limited – Shs
"Million
1,478.1
(1.018.3)
Revenue
|Cost of sales
Gross profit
Operating expenses
Operating profit
Interest pavable
Profit before taxation
Taxation
Profit for the year
1,790.4
(1.214.9)
575.5
459.8
(308.5)
151.30
|(19.4)
| 131.90
(32.0)
(408.6)
166.90
(27.5)
|139.40
(34.80)
104.60
99.90
Additional information
1. All purchases and sales were on credit
2. Zalip limited and Avela limited has announced their intention to pay dividend of sh.
135 million and shs 95 million respectively in respect of the year 2Ő2Ó.
3. The market value of a share in Zalip limited and Avela limited at the end of the year
were shs 6.50 and sh 8.20 respectively
Required
For each business, calculate two ratios that are concerned with each of the following
aspects:
i) Profitability
ii) Efficiency
i11) Liquidity
iv) Gearing
b) Interpret the ratios above
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