You are the accountant of Spicy Yummy, a fast food company. The directors of your company require you to analyze and interpret the most recent financial statements and compare its performance with those of previous year. You are presented with the following summarised accounts for Spicy Yummy. Statements of Comprehensive Income for the year ended 31 March 2019 and 2020: 31 March 2019 31 March 2019 $'000 $'000 Sales revenue 2,000 2,900 Cost of sales (see note below) (1200) (1800) Gross profit 800 1100 Distribution costs (160) (250) Administrative expenses (200) (200) Profit from operations 440 650 Finance cost (50) (50) Profit before tax 390 600 Income tax expense (44) (46) Net profit for the period 346 554 Note: 10% and 20% of purchases and sales were for cash respectively. Cost of sales figures are made up as follows: Year ended 31 March 2019 31 March 2019 $'000 $'000 Opening inventory 180 200 Purchases 1220 1960 1400 2160 Less closing inventory (200) (360) Cost of sales 1200 1800 Statement of Financial Position 31 March 2019 31 March 2019 $'000 $'000 $'000 $'000 Non-current assets -cost 3100 3674 Less accumulateddepreciation (1214) (1422) 1886 2252 Current assets Inventory 200 360 Trade receiveables 400 750 Cash at bank 100 120 700 1230 2586 3482 Capital & reserves Issued ordinary share capital 1200 1200 Accumulated profits 368 922 1568 2122 Non-current liabilities 10% loan notes 500 500 Current liabilities Trade payables 210 380 Sundry payables 260 430 Income tax 48 50 518 860 2586 3482 Required: 1. For each of the two years, calculate those ratios related to profitability (2), liquidity (2) and efficiency (2) to assist you in your analysis and interpretation of Spicy Yummy's financial statements. 2. Comment on the ratios you have calculated for both years and suggest possible reasons for any changes

You are the accountant of Spicy Yummy, a fast food company. The directors of your company require you to analyze and interpret the most recent financial statements and compare its performance with those of previous year. You are presented with the following summarised accounts for Spicy Yummy. Statements of Comprehensive Income for the year ended 31 March 2019 and 2020: 31 March 2019 31 March 2019 $'000 $'000 Sales revenue 2,000 2,900 Cost of sales (see note below) (1200) (1800) Gross profit 800 1100 Distribution costs (160) (250) Administrative expenses (200) (200) Profit from operations 440 650 Finance cost (50) (50) Profit before tax 390 600 Income tax expense (44) (46) Net profit for the period 346 554 Note: 10% and 20% of purchases and sales were for cash respectively. Cost of sales figures are made up as follows: Year ended 31 March 2019 31 March 2019 $'000 $'000 Opening inventory 180 200 Purchases 1220 1960 1400 2160 Less closing inventory (200) (360) Cost of sales 1200 1800 Statement of Financial Position 31 March 2019 31 March 2019 $'000 $'000 $'000 $'000 Non-current assets -cost 3100 3674 Less accumulateddepreciation (1214) (1422) 1886 2252 Current assets Inventory 200 360 Trade receiveables 400 750 Cash at bank 100 120 700 1230 2586 3482 Capital & reserves Issued ordinary share capital 1200 1200 Accumulated profits 368 922 1568 2122 Non-current liabilities 10% loan notes 500 500 Current liabilities Trade payables 210 380 Sundry payables 260 430 Income tax 48 50 518 860 2586 3482 Required: 1. For each of the two years, calculate those ratios related to profitability (2), liquidity (2) and efficiency (2) to assist you in your analysis and interpretation of Spicy Yummy's financial statements. 2. Comment on the ratios you have calculated for both years and suggest possible reasons for any changes

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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Question

Statements of Comprehensive Income for the year ended 31 March 2019 and 2020:

	31 March 2019	31 March 2019
	$'000	$'000
Sales revenue	2,000	2,900
Cost of sales (see note below)	(1200)	(1800)
Gross profit	800	1100
Distribution costs	(160)	(250)
Administrative expenses	(200)	(200)
Profit from operations	440	650
Finance cost	(50)	(50)
Profit before tax	390	600
Income tax expense	(44)	(46)
Net profit for the period	346	554

Note: 10% and 20% of purchases and sales were for cash respectively. Cost of sales figures are made up as follows:

	Year ended
	31 March 2019	31 March 2019
	$'000	$'000
Opening inventory	180	200
Purchases	1220	1960
	1400	2160
Less closing inventory	(200)	(360)
Cost of sales	1200	1800

	Statement of Financial Position
	31 March 2019	31 March 2019
	$'000	$'000	$'000	$'000
Non-current assets -cost	3100		3674
Less accumulateddepreciation	(1214)		(1422)
		1886		2252

Current assets
Inventory	200		360
Trade receiveables	400		750
Cash at bank	100		120
		700		1230
		2586		3482

Capital & reserves
Issued ordinary share capital	1200		1200
Accumulated profits	368		922
		1568		2122

Non-current liabilities
10% loan notes		500		500

Current liabilities
Trade payables	210		380
Sundry payables	260		430
Income tax	48		50
		518		860
		2586		3482

Required:

1. For each of the two years, calculate those ratios related to profitability (2), liquidity (2) and efficiency (2) to assist you in your analysis and interpretation of Spicy Yummy's financial statements.

2. Comment on the ratios you have calculated for both years and suggest possible reasons for any changes.

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