A shareholder of a certain company is concerned that the company has recorded a reducedlevel of profits in 2020 compared to 2019. The Profit for the year has reduced from K272.4m toK5.9m. You have been requested by the concerned shareholder to prepare a detailed reportanalysing the financial performance and financial position of the company for the year ended 31 stDecember 2020From the given Financial statements. Calculate the following ratios for 2020 and 2019I. Gross Profit %ii. Operating profit %iii. Profit for the Year %iv. Current Ratiov. Acid Test Ratiovi. Cash Ratiovii. Average Debt collection Period in daysviii. Average Creditor Payment Period in daysix. Average Stock Holding Period in daysx. Total liabilities to Total Equity Ratioxi. Total liabilities to Total Asset Ratioxii. Return on Total Assetsxiii. Return on Equity Statement of profit or loss and other comprehensive incomeRevenue from contracts with customersCost of salesGross profitDistribution costsAdministrative expensesImpairment credit/ (charge) on financial assetsOther incomeOther expensesOperating profitFinance incomeFinance costsFinance (costs) / income.netProfit before income taxIncome tax expenseProfit for the yearOther comprehensive incomeTotal comprehensive income for the yearEarnings per share for profit attributable to the equity holders of theCompanyBasic and diluted (Kwacha per share)Notes67811111214For the year ended 31 December20202,305,425(1,346,701)958,724(178,028)(302,323)3,002697(459,170)22,9021,557(15,974)(14,417)8,485(2,546)5,9395,9390.0120192,092,589(1,175,799)916,790(140,264)(403,055)(1,802)26,876(66,591)331,95455,036(30,108)24,928356,882(82,468)274,414274,4140.50 Statement of financial positionCapital and reserves attributable to the Company's equity holdersShare capitalShare premiumRetained earningsNon-current liabilitiesDeferred income taxTotal equity and non-current liabilitiesNon-current assetsPrperty, plant and equipmentIntangible assetsAccount receivableCurrent assetsInventoriesTrade and other receivablesCurrent income taxCash and cash equivalentsCurrent liabilitiesBorrowingsTrade and other payblesTotal assets less current liabilitiesNotes1515131718192012212223As at 31 December20205,460450,207535,385991,052610,979610,9791,602,0312,149,85522,8162,0952,174,766426,640150,47479,152401,0071,057,27335,0001,595,0081,630,0081,602,03120195,460450,207584,0471,039,714635,648635,6481,675,3622,059,24624,6012,083,847486,667255,29410,542225,942978,44532,7611,354,1691,386,9301,675,362

Ratio Analysis - Ratios is the method of analyzing company's financial statements. By using ratio…

Answered: A shareholder of a certain company is…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter14: Financial Statement Analysis

Section: Chapter Questions

Problem 26E: Comprehensive income Anson Industries, Inc., reported the following information on its 20Y1 income...

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A shareholder of a certain company is concerned that the company has recorded a reduced
level of profits in 2020 compared to 2019. The Profit for the year has reduced from K272.4m to
K5.9m. You have been requested by the concerned shareholder to prepare a detailed report
analysing the financial performance and financial position of the company for the year ended 31 st
December 2020From the given Financial statements. Calculate the following ratios for 2020 and 2019
I. Gross Profit %
ii. Operating profit %
iii. Profit for the Year %
iv. Current Ratio
v. Acid Test Ratio
vi. Cash Ratio
vii. Average Debt collection Period in days
viii. Average Creditor Payment Period in days
ix. Average Stock Holding Period in days
x. Total liabilities to Total Equity Ratio
xi. Total liabilities to Total Asset Ratio
xii. Return on Total Assets
xiii. Return on Equity

Statement of profit or loss and other comprehensive income
Revenue from contracts with customers
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Impairment credit/ (charge) on financial assets
Other income
Other expenses
Operating profit
Finance income
Finance costs
Finance (costs) / income.net
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Earnings per share for profit attributable to the equity holders of the
Company
Basic and diluted (Kwacha per share)
Notes
6
78
11
11
12
14
For the year ended 31 December
2020
2,305,425
(1,346,701)
958,724
(178,028)
(302,323)
3,002
697
(459,170)
22,902
1,557
(15,974)
(14,417)
8,485
(2,546)
5,939
5,939
0.01
2019
2,092,589
(1,175,799)
916,790
(140,264)
(403,055)
(1,802)
26,876
(66,591)
331,954
55,036
(30,108)
24,928
356,882
(82,468)
274,414
274,414
0.50

Statement of financial position
Capital and reserves attributable to the Company's equity holders
Share capital
Share premium
Retained earnings
Non-current liabilities
Deferred income tax
Total equity and non-current liabilities
Non-current assets
Prperty, plant and equipment
Intangible assets
Account receivable
Current assets
Inventories
Trade and other receivables
Current income tax
Cash and cash equivalents
Current liabilities
Borrowings
Trade and other paybles
Total assets less current liabilities
Notes
15
15
13
17
18
19
20
12
21
22
23
As at 31 December
2020
5,460
450,207
535,385
991,052
610,979
610,979
1,602,031
2,149,855
22,816
2,095
2,174,766
426,640
150,474
79,152
401,007
1,057,273
35,000
1,595,008
1,630,008
1,602,031
2019
5,460
450,207
584,047
1,039,714
635,648
635,648
1,675,362
2,059,246
24,601
2,083,847
486,667
255,294
10,542
225,942
978,445
32,761
1,354,169
1,386,930
1,675,362

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