You have recently been employed as a financial analyst for Crusher PLC and have just been provided the most recent financial statements for the 2 years covering 2019 and 2020. The Board of Directors have expressed concerns about the performance of the company and has asked you to analyse the company’s current financial position. The following are the financial statements of Crusher PLC for 2019 and 2020. Income Statement for year ended 31 December 2019 2020 £000 £000 Turnover 17,640 25,690 Cost of Sales (10,100) (16,980) Gross Profit 7,540 8,710 Operating Expenses (3,789) (5,257) Operating Profit 3,751 3,453 Interest Payable - (344) Profit before Taxation 3,751 3,109 Taxation (942) (777) Profit for the year 2,809 2,332 Statement of Financial Position as at 31 December 2019 2020 £000 £000 ASSETS Non-Current Assets 11,120 16,880 Current Assets Inventories 1,840 3,934 Trade Receivables 1,011 2,190 Cash 422 111 3,273 6,235 Total Assets 14,393 23,115 EQUITY & LIABILITIES Equity Ordinary shares of £0.50 each 8,000 8,000 Capital Reserves 950 950 Retained Earnings 1,112 2,544 Non-Current Liabilities 10,062 11,494 Loan Notes - 2,775 Current Liabilities Trade Payables 1,605 3,598 Other Payables 1,784 2,646 Taxation 942 777 Bank Overdraft - 1,825 4,331 8,846 Total Equity & Liabilities 14,393 23,115 Crusher PLC paid a dividend of £800,000 in 2019, and £900,000 in 2020. Return on capital employed ratio = year 2019 is 37.27% ; year 2020 is 24.20% Return on shareholders founds = year 2019 is 27.92% ; year 2020 is 20.29% Gross profit margin = year 2019 is 42.74% ; year 2020 is 33.90% Operatin profit margin = year 2019 is 21.26% ; year 2020 12.10% Inventories turnover period = year 2019 is 67 days ; year 2020 85 days Settlement period for trade receivables = year 2019 is 21 days; year 2020 32 days Settlement period for trade payables = year 2019 is 58 days; year 2020 is 77 days Current ratio = year 2019 is 0.755 times ; year 2020 is 0.704 times Acid test ratio = year 2019 0.33 times; year 2020 is 0.26 times Gearing ratio = year 2019 infinity ; year 2020 is 33.94% Interest cover ratio = year 2019 infinity; year 2020 10.03 times Earnings per share = year 2019 is 0.1755 ; year 2020 is 0.1457 Dividend cover = year 2019 is 3.5 ; year 2020 2.59 Required: Analyse and evaluate the changes in the financial position and performance of Crusher PLC using the previously calculated ratios.
You have recently been employed as a financial analyst for Crusher PLC and have just been provided the most recent financial statements for the 2 years covering 2019 and 2020. The Board of Directors have expressed concerns about the performance of the company and has asked you to analyse the company’s current financial position. The following are the financial statements of Crusher PLC for 2019 and 2020.
Income Statement for year ended 31 December
|
|
2019 |
2020 |
|
£000 |
£000 |
|
|
Turnover |
17,640 |
25,690 |
|
Cost of Sales |
(10,100) |
(16,980) |
|
Gross Profit |
7,540 |
8,710 |
|
Operating Expenses |
(3,789) |
(5,257) |
|
Operating Profit |
3,751 |
3,453 |
|
Interest Payable |
- |
(344) |
|
Profit before |
3,751 |
3,109 |
|
Taxation |
(942) |
(777) |
|
Profit for the year |
2,809 |
2,332 |
|
|
2019 |
2020 |
|
£000 |
£000 |
|
|
ASSETS Non-Current Assets |
11,120 |
16,880 |
|
Current Assets Inventories |
1,840 |
3,934 |
|
Trade Receivables |
1,011 |
2,190 |
|
Cash |
422 |
111 |
|
|
3,273 |
6,235 |
|
Total Assets |
14,393 |
23,115 |
|
EQUITY & LIABILITIES Equity Ordinary shares of £0.50 each |
8,000 |
8,000 |
|
Capital Reserves |
950 |
950 |
|
|
1,112 |
2,544 |
|
Non-Current Liabilities |
10,062 |
11,494 |
|
Loan Notes |
- |
2,775 |
|
Current Liabilities Trade Payables |
1,605 |
3,598 |
|
Other Payables |
1,784 |
2,646 |
|
Taxation |
942 |
777 |
|
Bank Overdraft |
- |
1,825 |
|
|
4,331 |
8,846 |
|
Total Equity & Liabilities |
14,393 |
23,115 |
Crusher PLC paid a dividend of £800,000 in 2019, and £900,000 in 2020.
Return on capital employed ratio = year 2019 is 37.27% ; year 2020 is 24.20%
Return on shareholders founds = year 2019 is 27.92% ; year 2020 is 20.29%
Gross profit margin = year 2019 is 42.74% ; year 2020 is 33.90%
Operatin profit margin = year 2019 is 21.26% ; year 2020 12.10%
Inventories turnover period = year 2019 is 67 days ; year 2020 85 days
Settlement period for trade receivables = year 2019 is 21 days; year 2020 32 days
Settlement period for trade payables = year 2019 is 58 days; year 2020 is 77 days
Acid test ratio = year 2019 0.33 times; year 2020 is 0.26 times
Gearing ratio = year 2019 infinity ; year 2020 is 33.94%
Interest cover ratio = year 2019 infinity; year 2020 10.03 times
Earnings per share = year 2019 is 0.1755 ; year 2020 is 0.1457
Dividend cover = year 2019 is 3.5 ; year 2020 2.59
Required:
Analyse and evaluate the changes in the financial position and performance of Crusher PLC using the previously calculated ratios.
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