The following financial statements relate to Charity plc:
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Income statement (profit and loss account) for year ended 30 September Year 4
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Revenue
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£000s
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£000s 2,480
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Cost of sales
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(1,100)
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Gross profit
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1,380
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Administration and selling expenses
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(678)
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Operating profit
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702
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Debenture interest
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(31)
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Profit before taxation
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671
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Taxation
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(154)
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Profit for equity holders
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517
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Note: The directors have recommended a dividend of 11.4 pence per share in total in respect of Year 4, to be paid following approval at the next annual general meeting.
Statement of financial position (balance sheet) as at 30 September Year 4
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£000s
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£000s
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Non-current assets, net of depreciation
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785
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Current assets:
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|
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Inventories (stocks)
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341
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Trade receivables (debtors)
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801
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Cash
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110
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Total current assets
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1,252
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Total assets
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2,037
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less: Current liabilities
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Trade payables (creditors)
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(90)
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Other payable and accruals
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(654)
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Total current liabilities
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(744)
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Net current assets
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508
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Total assets less current liabilities
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1,293
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Non-current liabilities
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|
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7% debentures
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(440)
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Total liabilities
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(1,184)
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Net assets
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853
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Share capital and reserves
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|
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Issued share capital
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|
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(1,360,000 ordinary shares of 25p nominal value)
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340
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Retained earnings
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513
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853
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Required
(a) Calculate ratios which measure:
(i) Liquidity and the use of working capital;
(ii) Management performance; and
(iii) Gearing.
(b) Explain how each ratio would help in understanding the financial position and results of the company.
(c) The market price of one share is 800 pence. Calculate ratios which will be of interest to investors.