Zanto Ltd is a private company in Ghana and extracts from its most recent financial statements are provided below: Statement of profit or loss for the year ended 31 March 2017 2018 GH¢ GH¢ Sales 50,000 36,000 Cost of sales (30,000) (24,000) 20,000 12,000 Profit from sale of division - 1,000 Distribution costs (5,300) (3,500) Finance costs (2,900) (4,800) Administrative costs (800) (400) 11,000 4,300 Income tax expense (3,300) (1,300) Profit after tax and for the year 7,700 3,000 Statement of financial position as at 31st March 2017 2018 Assets GH¢ GH¢ Non- current assets Property, plant and equipment 19,000 16,300 Goodwill 2,000 - 21,000 16,300 Current assets Inventories 5,800 3,400 Trade receivables 2,400 1,300 Cash at bank - 1,500 8,200 6,200 29,200 22,500 Ordinary share capital (issued at GH¢1 each) 10,000 10,000 Retained earnings 4,000 3,000 14,000 13,000 Non-current liabilities 10% debenture loan 8,000 4,000 Current liabilities Trade payables 3,100 4,300 Income tax payable 2,700 1,200 Bank overdraft 1,400 7,200 5,500 29,200 22,500 Required: a) Calculate the following ratios using the information in the financial statements above. i) Operating profit margin ii) Gross profit margin iii) Return on assets employed
Zanto Ltd is a private company in Ghana and extracts from its most recent financial statements are provided below: Statement of profit or loss for the year ended 31 March
2017 2018
GH¢ GH¢
Sales 50,000 36,000
Cost of sales (30,000) (24,000)
20,000 12,000
Profit from sale of division - 1,000
Distribution costs (5,300) (3,500)
Finance costs (2,900) (4,800)
Administrative costs (800) (400)
11,000 4,300
Income tax expense (3,300) (1,300)
Profit after tax and for the year 7,700 3,000
2017 2018
Assets GH¢ GH¢
Non- current assets
Property, plant and equipment 19,000 16,300
21,000 16,300
Current assets
Inventories 5,800 3,400
Trade receivables 2,400 1,300
Cash at bank - 1,500
8,200 6,200
29,200 22,500
Ordinary share capital (issued at GH¢1 each) 10,000 10,000
14,000 13,000
Non-current liabilities
10% debenture loan 8,000 4,000
Current liabilities
Trade payables 3,100 4,300
Income tax payable 2,700 1,200
Bank overdraft 1,400
7,200 5,500
29,200 22,500
Required:
- a) Calculate the following ratios using the information in the financial statements above.
- i) Operating profit margin
- ii) Gross profit margin
iii)
- iv) Debt to equity
- v) Interest cover
- vi) Current ratio
vii) Quick ratio
- b) C
- i) profitability
- ii) liquidity
iii) gearing
of the company for the two-year periods based on the ratios computed above and advice management where appropriate.
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