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Hi, I was wondering if you could please provide a debrief of this section of the question as I am having some difficulty in working out where the answers have come from?
Thank you
You will have to tell me which of the 2009 exams you are referring to – June or December!
I have found the question, but you are going to have to say which parts of the answer you are not clear about, because all of the workings are shown in the examiners answer.
The question says that the turnover increases by 8.4%, so you know that the turnover becomes 16M x 1.084 = 17.344M
The question also gives the gross profit margin, the operating profit margin, the interest paid, the tax rate and the dividend payout ratio, and so you are able to complete the Statement of profit or loss.
For the Statement of financial position, the question says that the non-current assets are unchanged and so stay at 22M. The current assets and the current liabilities can be calculated using the inventory, receivables and payables periods given in the question.
The share capital and the bank loan remain unchanged. The reserves increase by the forecast profit.
Finally, the overdraft is the missing figure so as to make the SOFP balance.
Have you watched the free lectures on working capital (so as to be able to calculate the current asset figures)?
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