ACCA FA · Guided practice (Show me how)
Chapter 26: Interpretation of Financial Statements
Interpretation - the profitability, liquidity and gearing ratios
Statements of financial position as at 31 March ($000):
| 2019 | 2018 | |
|---|---|---|
| Property, plant and equipment | 6,500 | 5,600 |
| Inventory | 3,200 | 2,600 |
| Receivables | 3,000 | 2,400 |
| Cash | 300 | 600 |
| Total current assets | 6,500 | 5,600 |
| Total assets | 13,000 | 11,200 |
| Share capital and reserves | 6,400 | 5,600 |
| Non-current liabilities | 3,000 | 2,000 |
| Current liabilities | 3,600 | 3,600 |
| Total equity and liabilities | 13,000 | 11,200 |
Statement of profit or loss for the year ended 31 March ($000):
| 2019 | 2018 | |
|---|---|---|
| Revenue | 24,000 | 20,000 |
| Cost of sales | 16,800 | 14,600 |
| Gross profit | 7,200 | 5,400 |
| Distribution costs | 1,800 | 1,600 |
| Administrative expenses | 2,400 | 2,000 |
| Profit from operations | 3,000 | 1,800 |
| Finance costs | 300 | 200 |
| Profit before taxation | 2,700 | 1,600 |
| Company tax expense | 700 | 400 |
| Profit after taxation | 2,000 | 1,200 |
Calculate the profitability, liquidity and gearing ratios for the year ended 31 March 2019. Payables days are calculated on current liabilities and cost of sales, because purchases are not given. Use 365 days.
(a) Profitability
Calculate the profitability ratios for the year ended 31 March 2019.
(b) Liquidity and gearing
Calculate the liquidity and gearing ratios for the year ended 31 March 2019.
Opening this exercise…