The following are the accounts of Hayleigh Plc, a company that manufactures metal box for the packaging industry. Hayleigh Plc Statements of comprehensive income for years ended 31 December 2024 2023 Profit before interest and tax 2,200,000 1,570,000 Interest expense 170,000 150,000 Profit before tax 2,030,000 1,420,000 Taxation 730,000 520,000 Profit after tax 1,300,000 900,000 Dividends paid 250,000 250,000 Retained profit 1,050,000 650,000 Hayleigh Plc Statements of financial position as at 31 December 2024 2023 Non-current assets (written-down value) 6,350,000 5,600,000 Current assets Inventories 2,100,000 2,070,000 Receivables 1,710,000 1,540,000 10,160,000 9,210,000 Creditors: amounts due within one year Trade payables 1,040,000 1,130,000 Taxation 550,000 450,000 Bank overdraft 370,000 480,000 Total assets less current liabilities 8,200,000 7,150,000 Creditors: amounts due after more than one year 10% debentures 1,500,000 1,500,000 6,700,000 5,650,000 Capital and reserves Share capital: ordinary shares of 50c fully paid up 3,000,000 3,000,000 Share premium 750,000 750,000 Retained earnings 2,950,000 1,900,000 6,700,000 5,650,000 Required: a. Calculate the following ratios for the two years for the company: Ratios for a potential shareholder return on equity earnings per share Dividend cover Gearing i.e. debt to long term capital Ratios for a potential lender debt to equity interest cover current ratio acid test ratio b. Report briefly on the performance and state of the business from the viewpoint of a potential shareholder and lender using the ratios calculated above and explain any weaknesses in these ratios. c. Prepare common size income statement and statement of financial position for the two periods.
The following are the accounts of Hayleigh Plc, a company that manufactures metal box for the packaging industry.
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Hayleigh Plc |
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Statements of comprehensive income for years ended 31 December |
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2024 |
2023 |
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Profit before interest and tax |
2,200,000 |
1,570,000 |
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Interest expense |
170,000 |
150,000 |
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Profit before tax |
2,030,000 |
1,420,000 |
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730,000 |
520,000 |
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Profit after tax |
1,300,000 |
900,000 |
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Dividends paid |
250,000 |
250,000 |
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Retained profit |
1,050,000 |
650,000 |
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Hayleigh Plc |
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Statements of financial position as at 31 December |
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2024 |
2023 |
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Non-current assets (written-down value) |
6,350,000 |
5,600,000 |
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Current assets |
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Inventories |
2,100,000 |
2,070,000 |
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Receivables |
1,710,000 |
1,540,000 |
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10,160,000 |
9,210,000 |
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Creditors: amounts due within one year |
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Trade payables |
1,040,000 |
1,130,000 |
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Taxation |
550,000 |
450,000 |
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Bank overdraft |
370,000 |
480,000 |
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Total assets less current liabilities |
8,200,000 |
7,150,000 |
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Creditors: amounts due after more than one year |
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10% debentures |
1,500,000 |
1,500,000 |
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6,700,000 |
5,650,000 |
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Capital and reserves |
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Share capital: ordinary shares of 50c fully paid up |
3,000,000 |
3,000,000 |
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Share premium |
750,000 |
750,000 |
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2,950,000 |
1,900,000 |
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6,700,000 |
5,650,000 |
Required:
a. Calculate the following ratios for the two years for the company:
Ratios for a potential shareholder
return on equity - earnings per share
- Dividend cover
- Gearing i.e. debt to long term capital
Ratios for a potential lender
- debt to equity
- interest cover
- current ratio
- acid test ratio
b. Report briefly on the performance and state of the business from the viewpoint of a potential shareholder and lender using the ratios calculated above and explain any weaknesses in these ratios.
c. Prepare common size income statement and
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