Set out below are the financial statements for KLEE Inc. Limited: Profit and Loss Accounts ($) Sales 265 290 Profit before interest and tax 92 84 Interest 10 10 Profit on ordinary activities before taxation 82 74 Taxation 32 29 Profit on ordinary activities after taxation 50 45 Dividends 15 15 Retained profit 35 30 Balance Sheets ($) Fixed Assets Fixed Assets 24 56 Current Assets Stock 25 20 Debtors 21 20 Cash 3 6 Current Liabilities Trade Creditors 16 18 Taxation payable 11 8 Proposed dividend 15 15 Net Current Assets 7 5 Creditors: Amounts falling due after more than one year 10% Debentures 10 10 Total Net Assets 21 51 Shareholders’ Funds Share Capital 5 5 Profit and loss account 16 46 A) Calculate for both years two ratios that relate to gearing. Show your workings. B ) Discuss the ratios calculated above and identify any favourable/adverse movements since 2015. C) Discuss the problems that can arise when using ratio analysis.
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Set out below are the financial statements for KLEE Inc. Limited: |
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Sales |
265 |
290 |
|
Profit before interest and tax |
92 |
84 |
|
Interest |
10 |
10 |
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Profit on ordinary activities before |
82 |
74 |
|
Taxation |
32 |
29 |
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Profit on ordinary activities after taxation |
50 |
45 |
|
Dividends |
15 |
15 |
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Retained profit |
35 |
30 |
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Fixed Assets |
||
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Fixed Assets |
24 |
56 |
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Current Assets |
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Stock |
25 |
20 |
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Debtors |
21 |
20 |
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Cash |
3 |
6 |
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Current Liabilities |
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Trade Creditors |
16 |
18 |
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Taxation payable |
11 |
8 |
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Proposed dividend |
15 |
15 |
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Net Current Assets |
7 |
5 |
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Creditors: Amounts falling due after more than one year |
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10% Debentures |
10 |
10 |
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Total Net Assets |
21 |
51 |
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Shareholders’ Funds |
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Share Capital |
5 |
5 |
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Profit and loss account |
16 |
46 |
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A) Calculate for both years two ratios that relate to gearing. Show your workings.
B ) Discuss the ratios calculated above and identify any favourable/adverse movements
since 2015.
C) Discuss the problems that can arise when using ratio analysis.
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