Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem 1)

Directors of DPK Limited wish to compare the company’s most recent financial statements with those of the previous year. The company’s financial statements are given below:

                                                               DPK Limited                           
                                              Profit and Loss Accounts Year Ended
                                                                         30 June 2002                          30 June 2001
                                                                             Rs 000                                         Rs 000
Sales (note 1)                                                       2,500                                           1,800
Opening stock                                                         200                                              180
Purchases (all on credit)                                         1,960                                            1,220
                                                                             2,160                                            1,400
Less closing stock                                                   (360)                                             (200)
Cost of sales                                                           1,800                                            1,200
Gross profit                                                               700                                               600
Distribution costs                                                      (250)                                            (160)
Administrative expenses                                            (200)                                            (200)
Interest payable                                                         (50)                                               (50)
Profit before tax                                                          200                                               190
Taxation                                                                     (46)                                               ( 44)
Retained profit                                                            154                                                 146
Note 1: 80% of the sales are on credit.

Balance Sheets as at
                                                        30 June 2002             30 June 2001
                                                              Rs 000                           Rs 000
Non Current Assets                                  2,252                            1,886
Current assets Stock                                 360                                200
Debtors – trade                                         750                                400
Cash at bank                                             120                                 100
                                                                1,230                               700
Less current liabilities
Creditors – trade                                       (380)                               (210)
- sundry                                                     (430)                               (260)
Taxation                                                      (50)                                  (48)
                                                                   (860)                               (518)
Net current assets                                         370                                  182
Total assets less current liabilities                  2,622                               2,068
10% debentures                                          (500)                                (500)
                                                                   2,122                               1,568
Capital and reserves
Issued ordinary share capital                        1,200                                 1,000
Share premium account                                 600                                     400
Profit and loss account                                   322                                     168
                                                                   2,122                                  1,568
Required:

(a) Compute, for each of the two years, the following accounting ratios that must assist the directors for comparison.

(i) Current Ratio

(ii) Quick Ratio

(iii) Debtors Collection Period

(iv) Creditors Payment Period

(v) Gross Profit Margin

(vi) Return on Capital Employed

(vii) Return on Equity

(viii) Average Stock Turnover

(ix) Earnings per share

Demonstrate all your workings for each computations.

(b) Evaluate the liquidity position and the financial performance of the company at 30 June 2001 and 2002.

(c) Suggest possible reasons for changes in the ratios between the two years.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M96366

Have any Question? 


Related Questions in Basic Finance

What do we mean by the term torque reaction a right angle

What do we mean by the term torque reaction? A right angle nut runner is used to produce 500 ft-lb of torque on a bolt having a 7/8 -9 UNC thread. The tool is 18 in. long. How much reaction force, created by the reaction ...

Discuss the process of capital budgeting including the cash

Discuss the process of capital budgeting including the cash flows that should and shouldn't be considered, incorporating risk measures into the process, sensitivity analysis, etc.

A machine will produce 10000 units a year the units are

A machine will produce 10000 units a year. The units are priced at $30 and have a variable cost of $7. There is a fixed cost of $50000 per year. the company pays no tax and has 0 tax rate. What is the present value of op ...

1 how many teams of five students each can be formed in a

1. How many teams of five students each can be formed in a class of 15 students? 2. Calculate 4C 2 and 5C 3 . 3. If you are offered $20 to draw a red ball from a bag that contains six green balls, two blue balls, and two ...

Question 1 a call provision gives bondholders the right to

QUESTION 1: A call provision gives bondholders the right to demand, or "call for," repayment of a bond. Typically, calls are exercised if interest rates rise, because when rates rise the bondholder can get the principal ...

Ethan is investing 50 every month for 20 years the annual

Ethan is investing $50 every month for 20 years. The annual rate is 6%. How much money will Ethan have in 20 years? An investment promises to pay $3,000 yearly for 10 years. The payments are received at the beginning of ...

Modify the cpl lagrangian heuristic to account for the case

Modify the CPL Lagrangian heuristic to account for the case where the demand is indivisible (i.e. the demand of any successor node must be satisfied by a single facility). Is the modified heuristic still time-polynomial? ...

1 discuss some of the major reasons why it is important to

1. Discuss some of the major reasons why it is important to understand national culture. 2. Discuss three of Hofstede's national culture dimensions. What are some of the implications of these dimensions for international ...

Mass-transfer data were obtained for the vaporization of

Mass-transfer data were obtained for the vaporization of naphthalene into a turbulent gas stream flowing in an annulus. Both the inside rod and the outer pipe of the annular conduit were made of naphthalene. To correlate ...

1 which of the gaps in figure do you think represents the

1. Which of the gaps in Figure do you think represents the major problem for most firms? How can a company attempt to eliminate the knowledge gap? The communications gap? 2. Compare and contrast the customer service, cus ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro