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    Income Statements For The November: @Chapter7Analyslngandlnterpretlngflnanclalstatements

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    Aik Luen Lim
    The company saw increases in revenue, operating profit, assets, and liabilities from 2009 to 2010. 1. The operating profit margin decreased slightly from 9.6% to 9.2% as operating profit increased less than revenue. 2. Return on capital employed fell from 7.3% to 5.5% as the expansion led to a larger increase in assets than in operating profit. 3. The current ratio declined from 3.3 to 1.4 as short-term borrowing and liabilities grew faster than current assets. In summary, the expansion increased revenue and assets but profitability and liquidity measures declined, suggesting the growth strained the company's resources.

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    Income Statements For The November: @Chapter7Analyslngandlnterpretlngflnanclalstatements

    Uploaded by

    Aik Luen Lim
    38 views1 page
    The company saw increases in revenue, operating profit, assets, and liabilities from 2009 to 2010. 1. The operating profit margin decreased slightly from 9.6% to 9.2% as operating profit increased less than revenue. 2. Return on capital employed fell from 7.3% to 5.5% as the expansion led to a larger increase in assets than in operating profit. 3. The current ratio declined from 3.3 to 1.4 as short-term borrowing and liabilities grew faster than current assets. In summary, the expansion increased revenue and assets but profitability and liquidity measures declined, suggesting the growth strained the company's resources.

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    Financial Management

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    Ratio-3

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    The company saw increases in revenue, operating profit, assets, and liabilities from 2009 to 2010. 1. The operating profit margin decreased slightly from 9.6% to 9.2% as operating profit increased less than revenue. 2. Return on capital employed fell from 7.3% to 5.5% as the expansion led to a larger increase in assets than in operating profit. 3. The current ratio declined from 3.3 to 1.4 as short-term borrowing and liabilities grew faster than current assets. In summary, the expansion increased revenue and assets but profitability and liquidity measures declined, suggesting the growth strained the company's resources.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    38 views1 page

    Income Statements For The November: @Chapter7Analyslngandlnterpretlngflnanclalstatements

    Uploaded by

    Aik Luen Lim
    The company saw increases in revenue, operating profit, assets, and liabilities from 2009 to 2010. 1. The operating profit margin decreased slightly from 9.6% to 9.2% as operating profit increased less than revenue. 2. Return on capital employed fell from 7.3% to 5.5% as the expansion led to a larger increase in assets than in operating profit. 3. The current ratio declined from 3.3 to 1.4 as short-term borrowing and liabilities grew faster than current assets. In summary, the expansion increased revenue and assets but profitability and liquidity measures declined, suggesting the growth strained the company's resources.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    @cHAPTER7ANALYSlNGANDlNTERPRETlNGFlNANclALSTATEMENTS(1)

    Financial information concerning the business is given below:

    Income statements for the year ended 30 November


    2009 2010
    t000 t000
    Revenue 9,482 1'1,365
    Operating profit 914 1,042
    lnterest charges (22) (81)
    Profit before taxation 892 961
    Taxation (358) (386)
    Profit for the year 534 575

    Siatements of financial position as at 30 November


    2009 2010
    t000 t000
    ASSETS
    Non-current assets
    Property, plant and equipment at cost less depreciation
    Premises 5,240 7,360
    Plant and equipment 2,375 4,057
    7,615 11,417
    Current assets
    lnventories 2,386 3,420
    Trade receivables 2,540 4,280
    4,926 7,700
    Total assets 12,541 19,117
    EQUIry AND LIABILITIES
    Equity
    Share capital 2,000 2,000
    Reserves 7,813 8,268
    9,813 10,268
    Non-current liabilities
    Borrowing - loans 1,220 3,675
    Current liabilities
    Trade payables 1,157 2,245
    Taxation 179 193
    Shorl-term borrowings (all bank overdraft) 172 2,736
    1,508 5,174
    Total equity and liabilities 12,541 19,117

    Dividends of f 1 20,000 were paid on ordinary shares in respect of each of the two years,

    Required:
    (a) Calculate, for each year (using year-end figures for statement of finapcial position r:+-ls.
    the following ratios:
    1 operating profit margin
    2 return on capital employed
    3 current ratio
    4 gearing ratio
    5 trade receivables settlement period
    6 sales revenue to capital employed.
    (b) Using the above ratios, and any other ratios or information you consider relevant, cor:-e.qr:
    on the results of the expansion programme.

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