How to solve this? 18. McBride plc is a company which uses a variety of component parts in itsmanufacturing operations. One of the company's suppliers has gone out of businessand seeks an alternative source of supply for the component previously purchased fromthat supplier. Two companies have been identified as potential suppliers and theyprepare accounts to 31 December and McBride obtained the following copies of eachcompany's financial statements for the year ended to 31 December 2020.Income Statement for the year ended to 31 December 2020X LtdY Ltd£0006,310(3.840) (4.240)2,070(760) (1.080)1,120(50)1,070(320)750£000Revenue5,720Cost of salesGross Profit1,880Operating expensesOperating profitInterestProfit before tax990(350)640(210)ТаxationProfit for the year430Statement of Financial Position for the year ended to 31 December 2020X LtdY Ltd£000£000Non current assets4,5706,330Current assetsInventoryTrade receivables5108906701,090Cash3401,5206,0901,9808,310Total AssetsX LtdY Ltd£000£000EquityShare capitalRetained earnings2,0002,0002.8201.0304,8203,030Non current liabilitiesLoan5003,500Current liabilitiesTrade payables4501,130210Таxation320Bank4407701.780Total equity andliabilities6,0908,310 Required:(a) Calculate ROCE, Current ratio, Receivable period (days), Inventory period(days), Payable period (days) for X Ltd and Y Ltd.(b) Use the information provided by these ratios to explain to the management ofMcBride plc which of the two companies seems likely to be a more reliablesource of supply.

Capital employed: It is the total amount of equity invested in the business. It is the difference…

18. McBride plc is a company which uses a variety of component parts in its manufacturing operations. One of the company's suppliers has gone out of business and seeks an alternative source of supply for the component previously purchased fr that supplier. Two companies have been identified as potential suppliers and they prepare accounts to 31 December and McBride obtained the following copies of each company's financial statements for the year ended to 31 December 2020. Income Statement for the year ended to 31 December 2020 X Ltd Y Ltd £000 £000 Revenue 6,310 (3,840) | (4.240) 1,880 5,720 Cost of sales Gross Profit Operating expenses Operating profit 2,070 (760) (1.080) 990 1,120 (50) Interest (350) Profit before tax 1,070 640 Taxation (320) (210) Profit for the year 750 430 Statement of Financial Position for the year ended to 31 December 2020 X Ltd Y Ltd £000 6,330 £000 Non current assets 4,570 Current assets Inventory 510 890

18. McBride plc is a company which uses a variety of component parts in its manufacturing operations. One of the company's suppliers has gone out of business and seeks an alternative source of supply for the component previously purchased fr that supplier. Two companies have been identified as potential suppliers and they prepare accounts to 31 December and McBride obtained the following copies of each company's financial statements for the year ended to 31 December 2020. Income Statement for the year ended to 31 December 2020 X Ltd Y Ltd £000 £000 Revenue 6,310 (3,840) | (4.240) 1,880 5,720 Cost of sales Gross Profit Operating expenses Operating profit 2,070 (760) (1.080) 990 1,120 (50) Interest (350) Profit before tax 1,070 640 Taxation (320) (210) Profit for the year 750 430 Statement of Financial Position for the year ended to 31 December 2020 X Ltd Y Ltd £000 6,330 £000 Non current assets 4,570 Current assets Inventory 510 890

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 8C: Ethics and Sale of Operating Component It is the end of 2019, and, as an accountant for Newell...

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